Exxon Mobil and Chevron’s parties!
Market analyst – IFC Markets
Last Friday, we had the Earnings report of two energy giants. Exxon Mobil (XOM) and Chevron (CVX), both could beat the expectations respectively by $1.58 and $2.96 EPS, while 73.79B and 44.71B revenues also were above the market estimates.
At the same time, earlier today we had Chinese and British PMI numbers, ahead of US ISM Manufacturing data. According to the published data, Caixin Manufacturing PMI in October increase to 50.6 from 50.0 in September. Even though if it is not that good as it could be, however, for this situation that we can see weakness in many economies, even a small increase means optimism for the future. Same in the UK, Manufacturing PMI in October increased just 0.1 compared to 57.7 in September to just 57.8 in October, with the same signal.
These earnings and data, especially after last weeks’ weaker than expected Q3 GDP numbers can be encouraging. And Energy companies’ strategy in paying the profit to their investors instead of new investments, for investors who believed in the Oil market even after almost bankruptcy of the industry during the height of the pandemic and collapse in oil prices is an ultra pay-off that can strengthen their loyalty.
With re-increasing the demand with economic recovery from pandemic crises, US crude prices topped $80 a barrel in October, for the first time since 2014. Global energy demand is rebounding faster than anticipated and now we have more than 99M barrels demand per day, according to the IEA data. At the same time, Shares of big oil companies still are attractive as energy demand increases sharply with the strong economic recovery that we are expecting to see in the first half of 2022.
From the technical point of view also is in a clear uptrend with S1 and S2 respectively at 82.80 and 80 US dollars. Technical indicators remain bullish, with RSI above 60 and an increasing OBV trend line in the H1 chart. In the H4 chart, the downtrend line of OBV has been violated and RSI is back to 55, which can be the signal of the beginning of another bullish round.