“Without a doubt, our delivery this quarter reflects the macroeconomic environment,” Shell CEO Ben van Beurden told analysts.
Breakdown: Market conditions were a key factor. Exxon noted that global average oil prices rose about $ 22 per barrel in the first quarter. In the second quarter, they rose another $ 12, “pushing the benchmark slightly above the 10-year range.”
“The strong second quarter results reflect a harsh global market environment where demand has returned to near pre-pandemic levels and supply has shrunk,” Exxon CEO Darren Woods told analysts. “The situation has been aggravated by events in Ukraine, which have contributed to the increase in the prices of crude oil, natural gas and refined products.”
Refining businesses have exploded as capacity remained limited, a problem stemming from the money-saving efforts during the early days of the pandemic. The refinery shutdown rate in 2020 was three times the rate observed during the 2008 financial crisis, according to Woods.
Exxon will be able to process an additional 250,000 barrels per day in early 2023 once it expands its refinery in Beaumont, Texas.
Oil companies are confident enough in the future to continue lavishing shareholders with rewards. Shell announced $ 6 billion in share repurchases in the next quarter, while Chevron said it intends to repurchase up to $ 15 billion of shares annually.
But this last quarter may have been the high point. Oil prices fell more than 4% in July as global recession fears took hold, which reduced demand forecasts.
Oil prices fell Monday after China, the world’s largest crude oil importer, released data showing a weakening of the manufacturing sector.
Demand for refineries may also decline as drivers, worried about inflation, consume less gasoline.
Coming soon: The Organization of Petroleum Exporting Countries, better known as OPEC, will meet at the end of this week to decide its strategy for September. The United States has asked the Gulf states, including Saudi Arabia, to increase their crude oil production, which could drive prices down further. But it is not clear that the group will join.
The first grain ship leaves the port of Ukraine after a safe passage agreement
Details, details: Ukrainian and Turkish officials have confirmed that the ship, which carries over 26,000 tons of corn to Tripoli, Lebanon, has left the port. It is also moving on the satellite tracker of the MarineTraffic ship.
A total of 5 million tons of wheat is expected to leave Ukraine each month under an agreement signed in Istanbul last month, hailed as a diplomatic breakthrough.
Ukraine is one of the main wheat exporters in the world. But Russian troops were blocking key ports, trapping millions of tons inside the country.
Wheat prices hit an all-time high in March, shortly after the Russian invasion. They have since fallen by more than 40%, in part due to investors’ anticipation of a safe passage deal. Corn prices have fallen by around 12% since the beginning of March.
But questions about whether Russia will abide by the deal loom as it continues its campaign of military aggression.
“This is such an important step, but it is a first step,” the UK ambassador to Ukraine tweeted on Monday. “[Russia] now he must honor their part of this agreement and let the grain ships pass safely. And they must stop burning and appropriate [Ukrainian] grain.”
US stocks have just had their best month since 2020
US equities just took a hit in July, jumping over 9% to reach their best month since November 2020.
“There are still many commentators who describe this as a bear market rally,” Dutch bank ING strategists noted Monday.
However, there are signs that some players are willing to put more money on the table. The S&P 500 rose during four out of five trading sessions last week. Bank of America, which tracks fund flows, saw the largest inflows in US equities in six weeks.
Investors have decided that the Federal Reserve may make efforts to raise interest rates less than previously anticipated. Yet there is a lot of debate as to whether this is the correct reading of the Fed’s message last week.
“Investors have clearly chosen to choose [Fed Chair Jerome] Powell’s dovish comments and ignore the hawkish ones, ”wrote Ed Yardeni, president of Yardeni Research, in a note to clients.
Even today: July’s ISM Manufacturing Index comes in at 10am ET.