Exxon Mobil, everything seems to be working out for the company in 2021.
As of Thursday afternoon, shares of Exxon (ticker: XOM) up more than 4% on the day were on track for their ninth consecutive gain. The stock has risen 22% in that period. It has gotten some help from regulators in recent days. A pipeline in the Permian Basin in which the company has a 30% stake won approval from the Federal Energy Regulatory Commission this week.
And Exxon is suddenly getting a warm welcome on Wall Street, raising the possibility that fund managers will give it another look. Analysts at both J.P. Morgan and Morgan Stanley are now urging investors to buy the stock. J.P. Morgan hadn’t raised its rating on Exxon to Buy since at least 2014.
Mizuho says oil stocks are ripe for a rebound. Jeff J Mitchell/Getty Images
Investors have been stressed about the possibility that oil demand has already peaked and it could be all downhill from here. The pandemic has reduced demand for oil as fewer people commute to work, and a shift to renewables will soon reduce demand for oil on a longer-term basis.
But one analyst says the doom-and-gloom may be overstated. In fact, Mizuho analyst Daniel Boyd is betting that oil companies which have cut their drilling substantially in response to the pandemic are actually producing too little oil now and a shortage is coming. That could lead to higher prices than the market is currently anticipating, and it could boost some stocks.