Exxon (NYSE: XOM) stock price dipped to the lowest level since 2010 following the huge oil price drop in the past couple of days. The threats of lower oil demand from China are among the biggest contributor to the XOM share price selloff. China has stopped manufacturing and industrial activities in several cities as the virus identified in Hubei late last year continued to spread into the other parts of China.
The threat of the virus is significantly impacting imports and exports of the second-largest economy. China is the largest importer of oil and other commodities. Consequently, the energy sector lost substantial value in the past few days. Oil prices plunged close to 6% this week alone. Exxon stock price lost almost 9% since the beginning of this year.
Future Fundamentals are Strong
The dip in Exxon stock price is presenting a buying opportunity for long-term investors. This is because the long-term fundamentals appear strong; the company’s dividend growth is also safe considering cash generation potential and asset disposal program.
Exxon has been moving its focus towards high margin U.S. assets while it is working on selling non-core international assets. The one of the largest oil & gas major is accelerating its biggest assets sale plan of $25B of oil and gas fields in Europe, Asia, and Africa over the next five years. The company is seeking to complete the sale of $15 billion of assets by 2021.
On the other hand, Exxon Mobil’s strategy of investing in U.S. asset plays is working. Its third-quarter oil production from the Permian basin increased 7% compared to the previous quarter and up almost 70% from the past year period.
Exxon Stock Price Is Presenting a Buying Opportunity
XOM share price selloff is only supported by external factors such as oil price volatility and problems in China. Traders are showing concerns over low demand due to the threat of Coronavirus. Fortunately, market analysts are seeing short-term headwinds as a buying opportunity for long-term investors.