PreMarket Prep Stock Of The Day: Exxon Mobil

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Stock Of The Day: Exxon Mobil

With crude Oil having its worst day since 1991, issues in the energy sector suffered big time with many of them reaching levels not seen in well over a decade. Considering the overall results of the broad market since then, it makes the energy sector one of the worst performing sectors on a relative performance.

Fall From Grace

Being an ardent follower of the S&P 500 index for decades has allowed me to follow the rotation of the top components of the index, especially the top 11, as they usually comprise over 20% of the entire index.

In 2010, Exxon Mobil XOM was the largest component in the index, with Chevron Corporation CVX ranked in the top 10 as well. Since that time, Exxon Mobil has underperformed the index by over 200%. While over 20% concentration in the top 11 components remains high, it's similar to where it was in 1980. Of course, you don't have to be a rocket scientist to identify the top components today as they're all technology companies.

At Monday's closing price, Exxon Mobil had fallen to the 24th ranked component in the index.

Exxon Mobil Completes 8 Major Upstream Projects In 2014 And Peaks

Since crude oil peaked in June 2008 at the highest inflation-monthly average average price of $148.83/barrel, it went straight down for seven months ending January 2009 under $100/barrel.

Since that time, it has had long periods consolidation and another sharp decline in price from June 2014 until February 2015. For the most part, it has been grinding lower with minor rallies followed by steep declines.

Although the issue went on to make a new all-time high of its own accord in July 2014 ($104.76), it has lost over half of its value since then, ending Monday's session at $41.86. The rally at that time was primarily based on its full-year delivery production of 4 million oil equivalent barrels per day.

Moving Forward

With the 25% decline in crude oil prices on Monday, the prospects for it even reaching $50 in the near future has a low probability. The electrification of the car industry, the push for clean energy and other factors have been eroding the demand for oil over the last several years.

Coupled with the worldwide outbreak of coronavirus that has crippled major oil consumers like airlines and cruise lines, along with putting a major damper on travel, the prospects for a major recovery in the issue remains bleak.