To The Moon

$Exxon Mobil(XOM)$ $Energy Select Sector SPDR Fund(XLE)$ $Chevron(CVX)$ 📉🛢️ WTI Volatility Is Creating A Major Opportunity In XLE And XOM 🛢️📉

🎯 Executive Summary

I’m extremely confident the violent WTI whipsaw is creating one of the most asymmetric risk reward windows in global markets, centred on the Energy Select Sector SPDR Fund (XLE) and its dominant heavyweight Exxon Mobil (XOM). WTI fell roughly 4% on 12 Nov to US$58 then recovered toward US$59 on 13 Nov. This captures the entire macro backdrop in a single swing. Oversupply continues to exert downward pressure while geopolitics injects a constantly shifting risk premium into the curve.

US sanctions on Lukoil and Rosneft threaten to remove 1M to 2M bpd from export channels. Middle East tensions and Ukrainian strikes on Novorossiysk port risk another 1M to 2M bpd. Venezuela’s instability affects roughly 17% of global reserves. Yet the IEA confirms global supply jumped 3.1M bpd YoY, creating a projected 2M bpd surplus into Q4 2025.

This tension is precisely the catalyst that historically drives rotation into energy ETFs. XLE is reclaiming its 200DMA while forming an inverted H and S inside a three year bull flag. XOM, which makes up 24% of XLE, just delivered US$7.5B Q3 net income and US$1.88 adjusted EPS on US$85.29B revenue. All uploaded charts show tightening consolidation primed for expansion. This is where structural cycles begin.

💰 Financial Performance Breakdown

XOM demonstrates integrated strength across every revenue engine. Production remains near 4.3M boe/d. Refining margins rose 15% YoY in Q3. Q3 net income hit US$7.5B. Adjusted EPS was US$1.88, beating by US$0.05. GAAP EPS registered US$1.76. Revenue reached US$85.29B, above US$83.6B consensus.

Free cash flow reached US$6.3B with US$14.8B operating cash flow. Shareholder returns totalled US$9.4B, including US$4.2B dividends and US$5.1B buybacks. XOM lifts the Q4 dividend to US$1.03, marking 43 consecutive years of increases. Permian production remains on track for 1.6M boe/d. Guyana continues to surpass expectations.

Consensus expects FY25 adjusted EPS of US$6.53. Capex stays below the lower end of US$27B to US$29B guidance excluding US$2.4B M and A. Across the energy complex, Chevron and ConocoPhillips have signalled capex discipline. Integrated majors outperform pure E and P names when WTI trades below US$60 due to downstream resilience.

XOM trades roughly 18M shares per day with US$2.1B daily turnover, forming the liquidity backbone of XLE, which holds US$26.85B AUM.

🛠️ Strategic Headwinds and Execution Risk

Oversupply remains the strongest macro undertow. The IEA reports +3.1M bpd YoY supply growth with a 2M bpd surplus projected into Q4 2025. OPEC plus output has risen 137k bpd in Nov and 2.7M bpd cumulatively since Apr. Non OPEC supply continues outpacing consumption by roughly 700k bpd.

The EIA expects Brent to average US$68.76 in 2025 then fall to US$54.92 in 2026 due to persistent stock builds of roughly 2.1M bpd in H2 2025. US inventories rose 1.8M barrels in Oct.

Execution risk lies in upstream margin compression if WTI holds under US$60. Downstream operations soften the blow for integrated majors. Pure producers face tighter capex flexibility. Geopolitics introduces uncertainty, with Russia sanctions, EU phase outs, and secondary sanctions risk toward India and China. Cost savings exceed US$2.2B in 2025 with structural targets above US$18B by 2030.

🧠 Analyst and Institutional Sentiment

Analysts maintain a firm Buy bias on XOM. Average PT sits at US$128.87, roughly 9% upside from current US$118 levels. High targets: Wells Fargo US$156, Scotiabank US$155. Wolfe Research reiterates Outperform at US$138. Barclays remains Overweight at US$130. RBC sets US$105 on the low end. Zacks aggregates 23 analysts at US$129.57.

ETF flows into XLE stabilised as value rotation accelerated. Combined, XOM, CVX, COP, SLB, and DVN represent 76.42% of XLE weighting. Institutional ownership remains above 50% across Vanguard, BlackRock, and State Street.

CEO Darren Woods stated exactly: “We achieved the highest EPS we have ever recorded in a similar oil price environment.” Options flow confirms call accumulation on XLE’s 200DMA reclaim and dark pool buying on XOM dips.

📉📈 Technical Setup

XLE is pressing against its 200DMA near US$85. The uploaded charts reveal a clean inverted H and S nested inside a three year bull flag. The neckline aligns with the 200DMA and multi month range highs. A confirmed breakout targets US$90 and ultimately US$100 on a full measured move.

RSI sits near 55, showing neutral but rising momentum. MACD is tightening into an upward cross with shrinking negative histogram bars. The 21EMA is curling above the 50DMA.

Keltner channels show XLE rebounding from a lower band flush. Bollinger Bands are widening, signalling volatility expansion.

XOM shows leadership strength with ascending triangle structure. Key support sits at US$115.70 then US$112. A breakout above US$118.50 targets US$121 then US$124. RSI at 63 confirms active upward momentum. MACD slope remains bullish. Volume spikes on dips illustrate institutional accumulation.

WTI’s US$58 to US$59 zone is the critical macro support that aligns with XLE’s technical turning point.

🌍 Macro and Peer Context

Oversupply gravity meets geopolitical premium in a tightening framework. US sanctions on Lukoil and Rosneft threaten 2M bpd. Ukrainian strikes on Novorossiysk port impair Russia’s export corridor. Middle East tensions could remove 1M to 2M bpd with little warning.

Fed policy adds a macro overlay as rate adjustments shift sector rotations. OPEC plus unwinding cuts adds bearish flow, while non OPEC supply gains share.

Integrated majors remain superior under sub US$60 WTI. COP, OXY, and DVN face more pressure. XLE’s flat 1Y return near 0.6% compared with SPX +10.6% reflects compression that typically precedes expansion. Rotations into IXC and IYE signal global positioning shifts.

📊 Valuation and Capital Health

XOM trades at forward P E 17.04 and EV EBITDA 6.2x, below CVX near 7.1x. FCF yield is near 8%. Cash stands at US$13.81B with long term debt at US$32.82B, keeping net debt to EBITDA below 1x. Structural savings target >US$18B by 2030.

XLE trades at fair valuation aligned with sector norms and benefits from diversified exposure to high quality integrated majors.

⚖️ Verdict and Trade Plan

I am positioning XLE as a Buy for rotational exposure. Ideal entry sits at US$85 near the 200DMA. Stop loss below US$80. Base target US$90, stretch target US$100.

For XOM, Buy entries sit at US$118.50 breakout or US$115 pullback. Stop loss US$112. Base target US$121, stretch US$124+.

Confirmation requires volume expansion above neckline zones, stabilising WTI above US$59 to US$61, and persistent call flow. Key catalysts: EIA inventory releases, OPEC plus decisions, Russia sanction escalations, Venezuela supply volatility, and Q4 earnings.

🏁 Conclusion

This is more than a simple crude rebound. It is a structural re alignment where oversupply fatigue, geopolitical stress, and multi year technical compression converge. XLE and XOM are not reacting to noise. They are building the foundation for the next energy cycle. Volatility is becoming the ignition point. Structure is becoming momentum. The market may not see it yet, but I do.

Execution beats noise. Structure beats emotion. Opportunity belongs to the trader who sees the cycle forming before it becomes obvious.

📌 Key Takeaways

• WTI fell 4% to US$58 then rebounded to US$59, reflecting oversupply versus geopolitical tension.

• XLE is reclaiming its 200DMA with an inverted H and S inside a three year bull flag.

• XOM posted US$7.5B Q3 net income, US$1.88 EPS adjusted, and US$85.29B revenue.

• IEA confirms +3.1M bpd supply growth with 2M bpd surplus projected in Q4 2025.

• Analysts target XOM at US$128.87 average with highs at US$155 to US$156.

• XOM FCF yield sits near 8% with strong balance sheet and net debt EBITDA <1x.

• Breakout signals include XOM >US$118.50 and XLE >US$85 with WTI holding >US$59.

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Trade like a boss! Happy trading ahead, Cheers, BC 📈🚀🍀🍀🍀

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