Shares of ExxonMobil (NYSE: XOM) were falling this morning and were down 3.1% as of 11:50 a.m. ET Tuesday, wiping out all of their gains and some from the previous day. Although the oil and gas stock typically mirrors movements in crude oil prices, there's another reason why ExxonMobil was falling today.
Oil price volatility is hurting investor sentiment
Crude oil prices tumbled Tuesday morning after OPEC cut its global oil demand forecast for 2024 to about 2 million barrels per day (BPD), or roughly 80,000 BPD lower than its previous forecast. OPEC also revised its forecast for oil demand for 2025. Brent crude, the global oil price benchmark, slumped more than 3% this morning and slipped below the $70 mark to a low it hasn't seen in more than a year. As one of the world's largest oil producers, ExxonMobil's earnings and cash flows are bound to be hit when oil prices dip.
Meanwhile, ExxonMobil has reportedly pulled out of a race to buy a stake in a promising oil discovery in Namibia, according to Reuters. ExxonMobil is among the several global oil and gas giants eyeing a piece of Galp Energia's asset. Galp owns an 80% stake in an oil block in the Orange Basin, a region where several oil large discoveries have been reported in recent years.
What should you do with ExxonMobil stock now?
On one hand, OPEC's demand for oil is weakening. On the other, speculation is rife that the OPEC+ producers will likely hike production in the coming months. The two factors combined could continue to put pressure on oil prices, and therefore, ExxonMobil stock.
However, the last thing you should do now is panic-sell ExxonMobil stock. ExxonMobil has navigated some of the worst oil storms in the 135 years or so of its existence and has built a fortress of a balance sheet. The oil giant has increased its dividend for 41 consecutive years and should still be able to offer you a bigger dividend this year and beyond even if oil prices drop further. In fact, ExxonMobil is a rock-solid dividend stock to buy on all dips.
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why ExxonMobil Stock Is Slipping Today was originally published by The Motley Fool