By Callum Keown
Exxon Mobil, Chevron and other oil stocks were falling early Monday as crude prices tumbled after Israel spared Iran's oil facilities over the weekend.
The sharp drop ensured that oil stocks were also dragged lower, with Exxon down 2.2% and Chevron falling 2.1% ahead of the open. Marathon Oil fell 2.8%, Occidental Petroleum was 2.5% down and ConocoPhillips slipped 2.5%. BP and Shell were both 2% lower in London trading.
The top 10 sharpest fallers in the S&P 500 early Monday were all oil-related stocks, led by APA Corporation's 3.7% drop, according to FactSet data.
Brent crude futures, the international benchmark, fell 5.3% to $71.62 a barrel early Monday, while West Texas Intermediate futures slipped 5.6% to $67.78. Just three weeks ago, Brent futures were above $80 and WTI futures reached $77.
Despite the losses, the sector's stocks are still mostly higher over the past month, largely thanks to oil's recent run-up. But Israel's "relatively limited" retaliation could see tensions subside in the short term and oil prices fall further, Pepperstone strategist Michael Brown said Monday.
"If so, one would expect a degree of risk premium to be priced out of crude, and for the bulls to lose one of their only sources of support -- particularly with the demand outlook still rather dour," he added.
While that could mean oil stocks have a bit further to fall in the short term, the Middle East conflict continues to escalate and it's impossible to rule out disruption to global oil supply.
Israel's retaliatory missile strike on Iran early Saturday avoided the country's oil and nuclear sites -- crucial for energy markets.
"As tensions in the region continue, oil prices could experience significant fluctuations. Therefore, staying informed and carefully evaluating potential outcomes in this highly complex geopolitical context is essential," XS.com market analyst Antonio Ernesto Di Giacomo said.
Write to Callum Keown at callum.keown@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
October 28, 2024 06:58 ET (10:58 GMT)
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