The Zhitong Finance App noticed that as U.S. crude oil futures fell below $80 per barrel, the energy sector declined as a whole. Meanwhile, Bank of America downgraded the stock rating of ExxonMobil (XOM.US) from “buy” to “neutral,” and set the target price at $158.
Bank of America pointed out that a cease-fire in the Middle East may present potential downside risks; furthermore, given that 20% of the company's production is currently suspended and the prospects in Qatar are uncertain, its potential upside is limited.
Bank of America analyst Jean Ann Salisbury raised ExxonMobil's rating in June of this year (the day the cease-fire statement was issued). The stock then fell to $140. At the time, she thought this was a good time to buy, meaning that long-term oil prices were expected to be lower than $70 per barrel, and viewed the possibility of another outbreak of hostilities as a “free call option.”
Salisbury is more bullish on Chevron (CVX.US) and maintains its “buy” rating while raising its price target from $210 to $227. She said that Chevron's internal restructuring has driven significant progress in a range of development opportunities so far this year: including the Venezuelan asset replacement, Argentina's RIGI (incentive system) application, the signing of a memorandum of understanding with Iraq on the West Qurna (West Qurna) project, winning the bid for the Sirte basin (Sirte basin) in Libya, and continued exploration in Namibia.
Although not all of the opportunities ended up succeeding, the analyst said, “We are very happy to see that Chevron is refilling its project reserves; although a year ago most investors seemed to think Chevron would need to rely on mergers and acquisitions (M&A) to achieve continued growth over the next ten years, 'now its mix of opportunities for organic growth (self-generated growth) looks much stronger. '”