The world’s largest oil companies are reporting underwhelming first-quarter profits as an array of geopolitical challenges and weaker prices around the world slowed recent progress in generating excess cash and crimped margins for processing oil into fuel.
Sanctions in Venezuela, production cuts in Canada and lower natural-gas prices in Asia took a toll on ExxonMobil, Chevron and other companies.
The business of refining crude, one of the most reliable profit centers in the industry during the last five years, was especially hard hit, The Wall Street Journal reports.
Exxon said earnings fell in every business segment inside and outside the U.S., and the company’s refining operations—a profit machine for decades in times of high prices and low—showed a loss of $256 million in the quarter.
“It was a tough market environment for us this quarter,” says Exxon Senior Vice President Jack Williams, who oversees the company’s refining and chemicals businesses on its management committee. “The margins were at historically low levels.”
French oil giant Total SA missed earnings expectations, and Chevron said profits fell by almost a third to $2.6 billion. BP and Royal Dutch Shell are set to report next week.
The anemic results added to concerns about the direction of crude prices, where lackluster demand, excess gasoline and a buildup of oil in storage led analysts to question whether a market rally of more than 40% this year may soon come to a close. Read the full story.