Exxon, Chevron tumble with oil prices on Covid variant news

Oil stocks, including Exxon Mobil (XOM) – Get the Exxon Mobil Corporation report and chevron (CVX) – Get the Chevron Corporation Report, collapsed on Friday, as oil prices plummeted amid concerns over the new variant of Covid roaming the world.

The World Health Organization will hold an emergency meeting on Friday following the discovery of the variant, known as B.1.1.529, in a traveler visiting Israel from South Africa earlier this week. He has also been identified in Hong Kong, according to British health authorities.

The variant carries a spike protein – the basis of infection – that is very different from what current vaccines are designed to neutralize, health officials said.

And it mutates quickly. Britain restricted travel from South Africa and several neighboring countries as a result, with the European Union following shortly thereafter.

More Covid means less economic growth means less demand for oil.

Exxon recently traded at $ 60.86, down 4%. It has climbed 54% year-to-date through Wednesday, as the economic rebound pushed oil prices higher.

Chevron recently traded at $ 112.69, down 4%, and has jumped 39% year-to-date through Wednesday.

Morningstar estimates the fair value at $ 76 for Exxon.

“While many of its peers have announced their intention to divert investment to renewables to meet long-term carbon intensity reduction targets, Exxon remains committed to oil and gas,” the analyst wrote. from Morningstar Allen Good last month.

“While his strategy is unlikely to win praise from environmentally conscious investors, we believe it is likely to prove more successful and, ironically, probably carries less risk. The end of oil is likely to come, but not so soon. “

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Felix J. Dixon