Oil has been hot lately, but XOM and MRO warrant caution
Oil prices are on the rise today, on track for their highest close since April as analysts continue to forecast supply deficits. Along with summer demand hopes, the Organization of the Petroleum Exporting Countries and its allies’ (OPEC+) decision to extend most of its oil output cuts triggered hedge funds to build up their oil positions in June.
The energy sector saw high buying volume last month and climbed alongside Brent crude oil, according to Goldman Sachs. However, investors may want to hold off on at least two oil and gas stocks in July: Exxon Mobil Corp (NYSE:XOM) and Marathon Oil Corp (NYSE:MRO). In fact, both appeared on Schaeffer’s Senior Quantitative Analyst Rocky White’s list of 25 worst S&P 500 Index (SPX) names to own this month.
XOM finished July lower in nine out of the last 10 years, with an average 1.8% loss. The security could be in the middle of a pattern of lower highs since its April 12 record high of $123.75, with familiar pressure now lingering at the $120 level, which rejected April and May rallies. The equity is up 14.9% so far this year, but was last seen down 0.2% to trade at $114.89.
Meanwhile, Marathon Oil stock finished the month lower 60% of the time over the last decade, with an average 3% drop. The security fell after hitting an April 12, 52-week high of $30.06, and is now running into pressure at $29. Since the start of the year, MRO has added over 18%, but was last seen 0.1% lower to trade at $28.63.