January short interest in Exxon Mobil (XOM) dropped over 8 million shares in January to 50 million. Intuition might say it should go the other way. With the price of oil down from a peak of $78 last year to the $52 range, oil company profits are falling.
Chevron (CVX) and Conoco Phillips (COP) have already indicated that their Q4 06 numbers will not be spectacular and Thomson is estimating that oil company profits will drop between 7% and 37% in the quarter that just ended.
But, no every expert is convinced that oil will stay down. Commodities guru Jim Rogers still thinks oils is going to $100 a barrel, and soon. Car industry executives still think gas will go to $4 in the next decade.
One clue that Wall St. is reluctant to bet too heavily against Exxon is that its share price has not dropped very much. On a 52-week high/low of $79/$56.64, Exxon trades at $73.50.
It may be too soon to take the benefits of $50 oil to the bank.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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