XOM

Exxon Mobil Corporation

85.64
USD
-2.81%
85.64
USD
-2.81%
52.10 105.57
52 weeks
52 weeks

Mkt Cap 362.56B

Shares Out 4.23B

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Prepare for $6.00 prices at the pump, says JP Morgan

National average gasoline prices hit $4.57 Wednesday, a record, but JP Morgan's head of commodity research says consumers should prepare for gasoline prices above $6.00 this summer. Prices have already surpassed $6.00 per gallon in California, and are over $7.00 per gallon in parts of the state. However, elevated oil prices (USO) are not the only culprit; dramatic reductions in global oil refining capacity, paired with reduced Russian and Chinese exports, have already resulted in shortages of oil products like jet and diesel fuel. In recent years, ~3mb/d of refining capacity has been shuttered or converted to bio-fuel production, according to JP Morgan estimates; the impact on fuel prices has thus far been negligible, as pandemic-related demand weakness masked underlying supply reductions. However, with oil demand reaching pre-pandemic levels in 2022, refiners are scrambling to meet demand; Russian diesel export reductions saw distillate margins spike in March, but as refiners adjust to produce more diesel, gasoline margins are catching up quickly: As Saudi's energy minister noted earlier in the week, a refining capacity shortage is a problem that no upstream producer can solve. Home Depot (HD) reported earnings this week, noting sustained price inflation, but an ability to pass through higher prices to a strong consumer; margin guidance from Target (TGT) and Walmart (WMT) was less optimistic; rising oil (USO), natural gas (UNG) and gasoline prices could further pressure consumers this summer, if JP Morgan's $6.00 gasoline price forecast proves accurate. The head of Seeking Alpha Quantitative Strategies says to buy these three integrated and refining stocks with great yields.

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