Exxon and Chevron Report Sluggish Profits

Oil and gas giants Exxon Mobil (XOM) and Chevron (CVX) beat weak third-quarter earnings expectations on Friday. But significantly weaker profit margins for refined products, reflecting lower fuel prices in the summer, led to lower overall net income for both companies compared to last year.

Exxon reported net income of $8.6 billion, or $1.92 per share. This beat consensus expectations as tracked by Visible Alpha. But profits fell by 5% from the same period last year and 7% from the second quarter of this year. Exxon’s earnings have declined year over year in five of the past six quarters.

Chevron suffered a sharp decline in profits compared to last year. The company recorded net income of $4.5 billion, or $2.48 per share. Profits fell by 31% compared to the same period last year, although they increased slightly from the second quarter of this year.

Chevron shares were up 3% in afternoon trading, while Exxon shares were down nearly 1%.

Impact of fuel prices

“Significantly weaker industrial refining margins” fell from historically high levels as “supply of industry capacity additions exceeds record global demand,” Exxon said.

In fact, average US gasoline prices for all grades fell to $3.48 per gallon during the quarter, a 10% decline from $3.87 in the third quarter of last year. Average diesel prices fell to $3.69 a gallon from $4.48, down 18%.

U.S. fuel prices peaked late this winter and early this spring, a seasonal anomaly that helped consumers and the Federal Reserve fight inflation. But for energy producers, lower oil, natural gas and fuel prices have cut into the historically strong earnings they enjoyed in late 2022 and much of 2023.