Exxon’s Darren Woods will break from oil giant’s longstanding CEO silence on quarterly results

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Darren Woods is breaking with tradition to become the first Exxon Mobil Corp. CEO to sit in on quarterly conference calls with analysts. But it’s not happening until next year.

Woods, who rose to chief executive in early 2017, will participate in the Irving-based company’s fourth-quarter earnings call, typically in late January or early February, Vice President of Investor Relations Jeff Woodbury said Friday in a webcast. In the meantime, a member of his inner circle will answer questions on quarterly calls.

“We believe that the investment community did not have a very good understanding of what our value growth potential was,” Woodbury said Friday during a conference call. “We have taken an extra effort in order to engage with the investment community at all levels of the corporation.”

Exxon CEO Darren Woods(Melissa Repko/Staff)
Exxon CEO Darren Woods
(Melissa Repko/Staff)

For Exxon, the announcement represents a seismic shift in corporate culture as well as a bow to investors and analysts who have said they want more direct access to Woods. Typically Woodbury hosts the calls alone.

Neither of the CEO’s predecessors — Rex Tillerson and Lee Raymond — participated in the quarterly ritual during their combined 24 years leading the company.

The comments follow an earnings report that included the worst first-quarter output since the 1999 merger with Mobil and financial results that fell short of expectations. Exxon reported first-quarter earnings of $4.65 billion, which missed analysts’ estimates despite rapidly rising crude prices.

Crude oil prices are recovering after years of low prices weighing down revenue and profit for Exxon and its peers. Higher prices helped offset higher costs and a drop in production.

The company’s profit jumped 16 percent, with earnings of $1.09 a share, a nickel shy of projections on Wall Street, according to a poll by Zacks Investment Research.

Revenue rose 16.3 percent to $68.21 billion, which easily exceeded analyst expectations of $66.07 billion.

Crude prices are up about $8 per barrel since the beginning of the year.

“Increased commodity prices, coupled with a focus on operating efficiently and strengthening our portfolio, resulted in higher earnings and the highest quarterly cash flow from operations and asset sales since 2014,” Woods said in the earnings announcement.

The Associated Press and Bloomberg

Oil price rally will not persuade OPEC to end production cuts, analyst says

CNBC

  • Crude futures have climbed to highs not seen since the early days of a slump in December 2014, prompting some analysts to suggest the recent price rally could hasten the process of OPEC devising an exit strategy
  • “We will see compliance drop in the second half of the year (so) they are going to want to really cement the gains they have made and the rebalancing they have achieved,” Richard Mallinson, geopolitical analyst at Energy Aspects, told CNBC on Friday
  • In recent weeks, big investment banks have raised their target price for oil as crude futures have risen to multi-year highs

Nervousness about what oil ministers say

Market views future of OPEC deal as a binary: Energy Aspects  

The recent uptick in oil prices is not likely to be enough to persuade OPEC to end production cuts this summer, Richard Mallinson, geopolitical analyst at Energy Aspects, told CNBC on Friday.

Crude futures have climbed to highs not seen since the early days of a slump in December 2014, prompting some analysts to suggest the recent price rally could hasten the process of OPEC devising an exit strategy. Brent crude futures hit a peak of $70.37 a barrel on Monday, with the global benchmark since paring some of its recent gains to trade at $68.90 on Friday afternoon.

However, when asked at what stage oil traders could expect OPEC to begin phasing out the current level of production cuts, Mallinson said the major oil producing group would need to wait until the middle of 2018 before it could “confidently” feel the market had leveled out.

Nonetheless, he did not expect the 14-member cartel to end its deal with 10 other allied producers in June.

“We will see compliance drop in the second half of the year (so) they are going to want to really cement the gains they have made and the rebalancing they have achieved,” he added.

Big banks raise oil price targets

In recent weeks, big investment banks have raised their target price for oil as crude futures have risen to multi-year highs.

Bank of America Merrill Lynch and Morgan Stanley both upped their forecasts for crude prices this week, while Goldman Sachs said the risks of prices overshooting its current targets are mounting.

Pumpjacks in an oil field.

Paul Giamou | Aurora | Getty Images
Pumpjacks in an oil field.

The main price driver has been a supply cut from OPEC and Russia, who started to withhold output in January last year. The OPEC-led production cuts, that are scheduled to last throughout 2018, are aimed at clearing a supply overhang and propping up prices.

OPEC is next scheduled to meet in Vienna, Austria, on June 22.

Mallinson said that while it was understandable for oil traders to be wary of the group’s summer meeting, he emphasized they would be mistaken in thinking the major oil producing group’s only options were to either stick with the current level of supply cuts or to allow flat-out global production.

The price of oil collapsed from near $120 a barrel in June 2014 due to weak demand, a strong dollar and booming U.S. shale production. OPEC’s reluctance to cut output was also seen as a key reason behind the fall. But, the oil cartel soon moved to curb production — along with other oil-producing nations — in late 2016.

— CNBC’s Tom DiChristoper contributed to this report.

Oil prices hit highest since 2014, but analysts warn of overheated market

CNBC

  • Oil prices hit their highest levels since 2014 on Wednesday
  • A broad global market rally has also been fueling investment into crude oil futures
  • Amid the general bull-run, which has pushed up crude prices by more than 13 percent since early December, there are indicators of an overheated market

A pump jack and pipes at an oil field near Bakersfield, California.

Lucy Nicholson | Reuters
A pump jack and pipes at an oil field near Bakersfield, California.

Oil prices hit their highest levels since 2014 on Wednesday due to ongoing production cuts led by OPEC as well as healthy demand, although analysts cautioned that markets may be overheating.

A broad global market rally, including stocks, has also been fueling investment into crude oil futures.

U.S. West Texas Intermediate (WTI) crude futures were at $63.40 a barrel at 0100 GMT – 44 cents, or 0.7 percent, above their last settlement. They marked a December-2014 high of $63.53 a barrel in early trading.

Brent crude futures were at $69.15 a barrel, 33 cents, or 0.5 percent, above their last close. Brent touched $69.29 in late Tuesday trading, its strongest since an intra-day spike in May 2015 and, before that, in December 2014.

“The extension of the OPEC agreement … and declining inventories are all helping to drive the price higher,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

In an effort to prop up prices, the Organization of the Petroleum Exporting Countries (OPEC) together with Russia and a group of other producers last November extended an output cut deal that was due to expire in March this year to cover all of 2018.

The cuts, which have mostly targeted Europe and North America, was aimed at reducing a global supply overhang that had dogged oil markets since 2014.

The American Petroleum Institute said late on Tuesday that crude inventories fell by 11.2 million barrels in the week to Jan. 5, to 416.6 million barrels.

Official U.S. Energy Information Administration data is due at 1530 GMT on Wednesday.

Overheated?

Amid the general bull-run, which has pushed up crude prices by more than 13 percent since early December, there are indicators of an overheated market.

Oil in the first two quarters

Oil in the first two quarters  

In the United States, crude oil production is expected to break through 10 million barrels per day (bpd) this month, reaching levels only Russia and Saudi Arabia have.

In Asia, the world’s biggest oil consumer region, refiners are suffering from high prices and ample fuel supplies.

“One area of concern, particularly in Asia, is that of (low) refining margins … This drop in margins could reduce Asian refiners’ demand for incremental crude in the near term and weigh on global prices,” said Sukrit Vijayakar, director of energy consultancy Trifecta.

Average Singapore refinery margins this week fell below $6 per barrel, their lowest seasonal value in five years, due to high fuel availability but also because the recent rise in feedstock crude prices dented profits.

Asian oil prices are higher than in the rest of the world. While Brent and WTI are still below $70 per barrel, the average price for Asian crude oil grades has already risen above that level, to $70.62 per barrel, Thomson Reuters Eikon data showed.

MOVES-China’s Rongsheng hires crude oil trader in Singapore

December 5, 2017
Reuters Staff

SINGAPORE, Dec 5 (Reuters) – Chinese conglomerate Zhejiang Rongsheng Holding Group has hired a senior crude oil trader to be based in its Singapore office, a company official said on Tuesday.

Trader Ray Liu, formerly from BB Energy and Sinochem Corp, will join Rongsheng International Trading Co in January, said the official who declined to be named.

Rongsheng plans to start up its 400,000-barrels-per-day refinery-petrochemical project in eastern China in late 2018.

The company set up a trading office in Singapore last year which will handle crude purchases as well as the trading of oil products and petrochemicals.

Rongsheng is looking to hire more crude and oil products traders as it plans to expand operations in Singapore, the official said.

Oil prices fell more than 1 percent on Wednesday

Oil prices slide after IEA casts doubt over demand outlook

CNBC

  • Oil prices fell more than 1 percent on Wednesday, continuing Tuesday’s slide
  • Crude prices are now down by around 5 percent since hitting 2015 highs last week
  • The International Energy Agency (IEA) on Tuesday cut its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next

A pump jack and pipes at an oil field near Bakersfield, California.

Lucy Nicholson | Reuters
A pump jack and pipes at an oil field near Bakersfield, California.

Oil prices fell more than 1 percent on Wednesday, continuing Tuesday’s slide after the International Energy Agency cast doubts over the past few months’ narrative of tightening fuel markets.

Brent crude futures were at $61.33 per barrel at 0515 GMT, down 88 cents, or 1.4 percent from their last close.

U.S. West Texas Intermediate (WTI) crude was at $55 per barrel, down 70 cents, or 1.3 percent.

The price falls mean that crude prices are now down by around 5 percent since hitting 2015 highs last week, ending a 40-percent rally between June and early November.

“Crude prices dropped dramatically after the IEA forecast a gloomy outlook for the near future … The drop was arguably exacerbated by a global selloff in other commodities,” said Sukrit Vijayakar, director of energy consultancy Trifecta.

The International Energy Agency (IEA) on Tuesday cut its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.

“The oil market faces a difficult challenge in 1Q18 with supply expected to exceed demand by 600,000 bpd followed by another, smaller, surplus of 200,000 bpd in 2Q18,” the agency said.

The demand slowdown could mean world oil consumption may not, as many expect, breach 100 million bpd next year, while supplies are likely to exceed that level.

The IEA report countered the Organization of the Petroleum Exporting Countries, which just a day earlier said 2018 would see a strong rise in oil demand.

Vijayakar said a reported increase in U.S. crude inventories was also weighing on prices.

Crude oil tracks for worst day in a month

Crude oil tracks for worst day in a month  

The American Petroleum Institute (API) said on Tuesday that U.S. crude inventories rose by 6.5 million barrels in the week to Nov. 10 to 461.8 million.

U.S. government inventory data is due later on Wednesday.

On the supply side, rising U.S. output also pressured prices.

U.S. oil production has already increased by more than 14 percent since mid-2016 to 9.62 million bpd and is expected to grow further.

The IEA said non-OPEC production will add 1.4 million bpd of additional production in 2018.

The IEA’s outlook pressures OPEC to keep restraining output in order to defend crude prices, which its members rely on for revenue.

OPEC and some non-OPEC producers including Russia have been withholding production this year to end years of oversupply.

The deal expires in March 2018 but OPEC will meet on Nov. 30 to discuss policy, and it is expected to agree an extension of the cuts.

“Anything less than a full nine-month extension delivered at the Nov. 30 meeting could precipitate a sell-off,” U.S. bank Citi said.