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Updated at 9:41 am EST
Exxon Mobil (XOM) – Get Exxon Mobil Corporation Report shares slumped lower Tuesday as a slide in global crude prices offset a forecast from the oil and energy giant that indicated a likely record surge in second quarter profits.
In an update filed with the U.S. Securities and Exchange Commission late Friday, Exxon said operating profits would likely rise $7.4 billion from the three months ending in March, when it recorded profits of $8.8 billion. Exxon is expected to publish its formal second quarter earnings on July 30.
Exxon said the bulk of the gains — around $4.5 billion — will come from improved margins in the sale of gasoline a diesel, a fact that is likely to elicit further criticism from President Joe Biden.
Biden Tweeted yesterday that “companies running gas stations and setting prices at the pump” should “bring down the price you are charging to reflect the cost you’re paying for the product,” a message that was mocked by the U.S. Oil & Gas Association, which claimed it was “written by a WH intern”.
“High energy prices are largely a result of underinvestment by many in the energy industry over the last several years and especially during the pandemic,” Exxon said.
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WTI futures for August delivery were marked $6.11 lower in early Tuesday trading at $104.31 per barrel as investors pared bets on global demand amid mounting recession concerns while Brent contracts for September, the global pricing benchmark, fell $5.56 to $107.95 per barrel.
Exxon shares were marked 3.7% lower in early Tuesday trading to change hands at $84.56 each, a move that would still leave the stock with a year–to-date gain of around 33%.
The energy sector is set to produce record earnings over the three months ending in June, with collective profits rising 222.6% from last year to $50.8 billion, according to Refinitiv forecasts, paced by a staggering 762% surge from the oil & gas refining and marketing sub-set.
Oil prices have risen around 5.5% over the three months ending in June, but are more than 60% higher than the average recorded over the same period last year. U.S. gas prices, meanwhile, hit an all-time high of just over $5 a gallon — based on national average prices complied by the AAA — last month.
Emergency U.S. crude stockpiles, however, are holding at their lowest levels since the mid-1980s following moves by the Biden Administration to tap the nation’s Strategic Petroleum Reserve in order to boost domestic supplies and help ease the politically-charged level of consumer gas prices.
U.S. crude prices have risen more than 35% since Biden first tapped the SPR in late November, thanks in part to western sanctions on the sale of Russian oil and OPEC’s reluctance to boost production amid questions over the pace of global demand.
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