Major oil companies signaled they remain under extreme financial pressure and oil prices slid Thursday as demand for fossil fuels rebounds slowly after being crushed by the coronavirus pandemic.
Despite a modest economic recovery, oil-and-gas companies are being hammered by a sustained drop in consumption of gasoline and jet fuel as millions of people work from home and avoid driving and flying, The Wall Street Journal reports.
A stock index of U.S. oil-and-gas companies is down about 57% in 2020 even as the overall stock market is up slightly. On Thursday, shares of Royal Dutch Shell and BP hit fresh 25-year lows, and ExxonMobil Corp. and Chevron Corp. also dropped. U.S. crude prices fell to around $38.58 a barrel Thursday afternoon, a level at which most companies can’t produce profitably.
Exxon and Shell said this week that key parts of their business continued to struggle through the summer and early fall, which will weigh down the third-quarter results they are set to report in coming weeks.
Exxon warned that it expected earnings from its oil-production unit to improve by as much as $1.8 billion from the second quarter, but that its natural-gas sales and its refining business could lose more money. Shell said Wednesday it would cut up to 9,000 jobs in a broad restructuring. The planned job cuts follow similar moves at peers including BP and Chevron Corp. Exxon has said it is conducting a workforce review, which might lead to layoffs.
The U.S. is now generating fewer than 11 million barrels of oil daily, down from around 13 million barrels a day early this year, Energy Information Administration data shows. Two-thirds of oil-and-gas executives who responded to a recent survey by the Federal Reserve Bank of Dallas said they think U.S. oil production will never fully recover. Read the full story.
