Exxon Mobil (XOM) stock surged Wednesday after it signaled natural gas prices would support already strong third-quarter expectations. Despite steep growth estimates, the energy giant projects it will not match its record profits from Q2 as oil prices have retreated along with refining and chemical segment profits.
Exxon reported its operating profit could come in at around $11 billion in the third quarter, according to federal filings made late Tuesday. That would be up sharply from $6.7 billion a year earlier, but a significant drop from the record $17.6 billion in operating profit from Q2.
The oil and gas giant’s Q3 earnings outlook primarily examines market dynamics, seasonal patterns and planned activities. Exxon says that other margin-related factors, including foreign currency exchange fluctuations, were not included.
However, the earnings preview showed Exxon’s natural gas segment bolstered by rising prices during the third quarter. In August, U.S. natural gas futures hit 14-year highs, topping $10 per million British thermal units (mmBtu). Exxon expects natural gas price strength to lead to a segment gain of $1.8 billion to $2.2 billion in Q3.
Meanwhile, the drop in prices for oil and other liquids, such as ethane and propane, is expected to result in a loss of $1.4 billion-$1.8 billion in those segments. There have also been decreased refining and chemicals margins this quarter compared to Q2. XOM forecasts a loss of $2.7 billion-$2.9 billion from changes in industry margins for energy products.
Exxon is expected to announce third-quarter earnings on Oct. 28. Analysts project a 123% earnings gain, to $3.52 per share. Wall Street predicts revenue will jump 42% to $105.1 billion, according to FactSet.
Exxon Mobil Stock
Exxon stock rallied more than 4% to 99.10 amid a general rise in oil and gas stocks during Wednesday’s market trading. That put shares up almost 14% so far for the week, and firmly back above their 50-day moving average. The stock is consolidating with a 105.67 buy point, according to MarketSmith, and with an early entry around 101.56.
The market status remains “in correction,” meaning investors should be building watchlists and waiting for a follow-through day.
Exxon Mobil Stock has a Composite Rating of 97. It has a 96 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share price movement with a 1 to 99 score. The EPS rating is 80.
Oil and gas stocks including Schlumberger (SLB), Marathon Oil Corporation (MRO), APA (APA) and Murphy Oil (MUR) rose Wednesday morning, stirred by the decision from OPEC+ to cut oil production by 2 million barrels per day (BPD).
It was the first output reduction since April 2020. The cartel’s move aimed to support oil prices against forecasts for decreasing economic activity and demand.
U.S. crude oil prices moved up 1.5% to 87.80 a barrel Wednesday after jumping 3% Tuesday. On Monday, oil gained around 5%. This comes after crude oil futures recorded their fourth consecutive monthly decline in September. Oil prices skyrocketed earlier this year, briefly hitting $130 per barrel in March after Russia invaded Ukraine.
However, crude oil prices have fallen more than 30% amid fears of a global economic slowdown and weaker energy demand.
Meanwhile, as crude oil prices increased early this week, U.S. natural gas futures traded down around 4% Monday to the lowest level since July. However, on Wednesday natural gas prices increased more than 1% to $6.93 per million British thermal units. That came after natural gas futures jumped 5.4% Tuesday.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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