The recent 10% drop in oil prices now trading about $65 a barrel it means that all the big oil companies took a hit in stock price. Exxon itself took a 4% hit on Friday. This would be bad in the short-term for anyone who followed my advice to buy Exxon a few weeks back. I still think Exxon will recover and might even make more money on cheaper oil. It just hurts to look and see that drop in stock price in a day. This is why we as investors need a well-diversified portfolio. The drop would be bad but it would not hurt the entire portfolio. Just a small drop on a small percentage. Bad but not catastrophic. We try to avoid those when handling money. Also, another reason to diversify in industry and across the globe.
Exxon could still easily recover and I think they will buy back more shares at this cheaper price. They might make more too because consumers are used to high gas prices so there would be less downward pressure to lower gas prices as much as the drop in oil prices. Exxon will also make plenty of money from its large holding of natural gas. Those prices are up and it looks to be a cold winter which will be good for Exxon. It might be several years or it could be in a few months when it recovers. Still la great long term-play.
OPEC is trying to hurt the United States Oil production that is competing with it. I think some of the OPEC members though will not be able to handle this squeeze and will lower production to raise prices. They depend on that money and have gotten used to the high price. It must be maintained in the long run.
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