Power Trip

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What's going on?

US oil giants Chevron and Exxon Mobil both posted record quarterly profits on Friday.

What does this mean?

The average price of one of Chevron’s barrels of oil was up 65% last quarter from the same time last year, while its natural gas was up nearly 200%. That helped the firm bring in a quarterly profit of nearly $12 billion – around 50% more than its previous quarterly record. Exxon didn’t do too shabbily either, with the rival oil giant’s profit coming in at record $17.9 billion – around four times more than it managed this time last year.

If you’re thinking those are big ol’ profits at a time when so many people are being crippled by their energy bills, you’re not alone: the US has previously called on companies to raise output to bring prices down, and this will only reinforce their concerns. And sure, Chevron and Exxon have both said they’re boosting supply, but the numbers don’t lie: they’re investing less in production than they are on share buybacks and dividends.

Why should I care?

The bigger picture: What goes up…
This comes hot on the heels of Shell and TotalEnergies’ updates last week, in which they broke records and tripled profits respectively. That means the four oil giants – plus BP, which reports next week – are on track to have made well over $50 billion in profit last quarter. But with the prospect of a recession looming, analysts think it could be downhill from here. That’s certainly plausible: the oil price fell 20% from its 14-year high last quarter.

For markets: Energy is your king.
That potential for recession has weighed down the energy sector’s stocks, with a key index tracking some of its biggest US companies down around 20% since June. But so dominant has the sector been that it’s still by far the best-performing of the year: it’s up 35% since the start of January, while the second-best performer – utilities – has risen a measly 2%.

Originally posted as part of the Finimize daily email.

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