ExxonMobil and Chevron delivered a dose of good news in a rough week for markets, with both oil majors beating analysts’ profit forecasts for the third quarter. Refining margins surged on the back of continued volatility in energy markets, and Exxon in particular reported its strongest profit result since the extraordinary surge in energy prices that followed Russia’s full-scale invasion of Ukraine in 2022.
Refining margins do the heavy lifting
When crude prices swing and fuel demand stays firm, refineries earn more from turning oil into petrol, diesel and jet fuel, and that is exactly what happened this quarter. Both companies’ downstream divisions outperformed, cushioning softer spots elsewhere in their businesses. The results continue a pattern investors have come to rely on: energy majors generating enormous cash even when the wider stock market is falling. There is more on the quarter’s winners and losers in our markets coverage.
Cash returns stay generous
Strong profits mean the two companies can keep funding the dividends and share buybacks that make them favourites of income investors. That mattered this week in particular, as the technology stocks that usually dominate portfolios were selling off; healthcare and real estate were the only other sectors to rally strongly. As the market news roundup recorded, nine of the eleven S&P 500 sectors still managed to close in positive territory on Thursday despite the index falling.
Energy’s moment in a nervous market
With tankers reported on fire in the Strait of Hormuz and oil prices catching a bid, energy has again become the market’s hedge against geopolitical risk. Analysts caution that refining margins can compress as quickly as they expand, but for now the oil majors are doing what they are built to do: converting a volatile world into reliable cash.
For investors shaken by the technology rout, this week’s earnings offered a reminder that diversification still works. The oldest economy stocks in the index quietly had one of their best weeks of the year while the newest ones had one of their worst.
