For much of the past year, investors have been bitter over Exxon, and Wall Street was rife with rumors that the company would cut its dividends to preserve cash. The stock price has plunged about half since the beginning of last January – dropping to $ 31 in November, its lowest level in almost 20 years.
But Exxon’s stock price has gone up again to around $ 46, mainly because energy prices have rebounded strongly in recent weeks. Oil prices have risen nearly 10% this year, and the blizzard in the Northeast is driving up natural gas prices because the fuel is used to heat homes and businesses. Exxon’s dividend now looks safe. And in addition to the write-offs, Exxon made a small profit in the last three months of the year.
“The industry has been in hell and back,” said Michael C. Lynch, president of Strategic Energy and Economy Research. “Most of them have survived the worst circumstances they have ever faced, and things are almost certain to improve here in terms of price and demand.”
Goldman Sachs predicted that oil prices could rise another $ 10 a barrel, reaching $ 65 in July. That would be a notable recovery in prices that dwindled by less than half in much of 2020, although it remained well below prices a decade or more ago, when a barrel of oil exceeded $ 140 and oil companies were making record profits .
The sector has suffered repeated shocks in recent years, with prices plummeting during the recession that started in December 2007, again in 2015, when OPEC flooded the market with oil to reduce American production and last year, when the pandemic broke out.
The pain of the industry has forced many companies to lay off employees and cut dividends. Dozens of once ambitious companies, like Chesapeake Energy, have declared bankruptcy in recent years.
Even now, when conditions appear to be improving, the sector’s prospects remain uncertain. Due to the emergence of new variants of the coronavirus, it is not clear how quickly the United States, Europe and other large economies will be able to control the spread of the virus. And then there are the bigger questions about climate change.