Exxon Mobil (XOM) is one of the most explosive stocks of 2022.
In fact, since the new year began, the oil stock ran from a low of about $60 up to around $70—all thanks to tight oil supply, heavy demand, geopolitical tension, and earnings and buyback news.
Even better: with oil prices showing no signs of cooling, Exxon could gush to higher highs.
For one thing, oil is quickly nearing $100 a barrel, a high we haven’t seen since 2014.
“The oil market is heading for simultaneously low inventories, low spare capacity and still low investment,” Morgan Stanley analysts wrote in a research note. As The Wall Street Journal reported, this forecast led the analysts to: “…[lift] their price forecast for the summer quarter by $10 a barrel, to $100 for Brent and $97.50 for West Texas Intermediate.”
A second reason to expect that oil prices will keep going up? Tensions are still running high between Russia and Ukraine.
To be honest, no one knows what’s happening. On one hand, the U.S. says Russia is moving into attack positions and will attack by the end of the week. On the other hand, reported NBC News, “Hours after issuing a global statement saying he heard Russia would attack his country on Feb. 16, Ukrainian President Volodymyr Zelenskyy walked back the prediction on Monday, clarifying that he was referring only to media reports.”
If there is a war, oil prices could spike. If there is no war, oil prices could pull back quickly.
One final reason to anticipate climbing prices: Exxon just crushed earnings, declared a dividend, and initiated a buyback program.
The company posted fourth-quarter 2021 earnings of $8.9 billion, or $2.08 per share resulting in full-year earnings of $23 billion, or $5.39 per share assuming dilution, according to a company press release. Then, it announced a cash dividend of $0.88, payable on March 10 to shareholders of record on February 10. And after that, Exxon announced a $10 billion buyback program.
Until the supply-and-demand issue cools off, and until we have clarity on Russia and Ukraine, oil could easily run to $100+, near-term. While that’s bad news for you and me at the gas pump, it’s great news for XOM shareholders.