(Reuters) – Exxon Mobil shares fell nearly 2% in early trading on Wednesday after the top U.S. oil producer warned of a decline in refining profits in the fourth quarter and weak earnings across its operations.
The earnings snapshot from the industry bell signaled a challenging environment as companies grappled with pricing pressures amid demand volatility.
Exxon expects fourth-quarter earnings to be down about $1.75 billion from the previous quarter.
For much of last year, Exxon and other oil majors faced reduced profitability from refining crude oil and selling petroleum products as a post-pandemic boom in demand ended. The opening of large plants around the world also put pressure on refining margin growth.
In the third quarter, Exxon's profit fell 5% from the year-ago quarter, while Chevron's profit fell 21%.
Exxon's earnings update is “consistent with revisions seen for independent refiners and other majors with heavy refining exposure,” Biraj Borkhataria, oil analyst with RBC Capital Markets, said in a note to investors.
The snapshot will likely be seen as “negative” and weigh on the shares in the near term, he added.
Exxon is one of the world's largest refiners with a total global refining capacity of 4.5 million barrels of oil per day and is also one of the world's largest producers of specialty commodities and chemicals.
The company is expected to post earnings of $1.76 per share in the fourth quarter, according to data compiled by LSEG. The oil major posted earnings of $2.48 a share a year earlier.
Exxon has a price-to-earnings (PE) ratio of 13.56 compared to Chevron's 16.43. A lower PE multiple indicates a more attractive investment opportunity.
Exxon shares rose 7.6% in 2024, underperforming the S&P 500's 23.3% gain.
(Reporting by Mrinalika Roy in Bengaluru; Editing by Sriraj Kalluvila)