Best Stock for 2009: ExxonMobilhttp://www.fool.com/investing/general/2008/12/18/best-stock-for-2009-exxonmobil.aspx David Lee Smith
December 18, 2008
Which stocks are looking fine in ’09? Discover all our Foolish ideas for The Best Stocks for 2009.
We inhabit a crazy world these days, what with triple-digit flip-flops becoming commonplace for the equity markets, along with the energy rollercoaster that's been such a major part of 2008. Think about it: We began the year with crude prices near $80 a barrel and watched them climb steadily to above $145 by midsummer. And then, in just the past five months, they've plummeted to about a third of their July highs. Whoo!
Where to from here?
Not to be cantankerous, but I'll tackle your second question first: It seems to me that an optimum way to participate in energy going forward -- and you absolutely shouldn't abandon the group -- is to salt away some shares in the big enchilada of Big Oil, ExxonMobil (NYSE: XOM ) . What follows is why I feel that way, along with why I believe that, if you're looking at a timeframe beyond, say, a year or 18 months, it's very difficult to argue that crude prices won't be higher than they are today -- maybe not back to $147 a barrel, but higher.
First, OPEC just agreed to cut 2.2 million daily barrels from its total oil production -- its deepest cut ever -- in an effort to thwart the continuing downward slide of crude global. And while agreeing to chop production and actually doing so may not be one in the same for the cartel, oil's global supply and demand remain tight enough that almost any production reductions should have some effect on prices.
Big spending cuts
And longer term, in a recent missive, ExxonMobil repeated its contention that global energy demand will ultimately have risen by 35% in the 2005-2030 period. If 2030 seems like eons away, think again. It really isn't.