Exxon Profit Up 53 Percent, Best Quarter Since Third Quarter of 2008 When Gas Prices Hit Record High

Exxon Profit Up 53 Percent, Best Quarter Since Third Quarter of 2008 When Gas Prices Hit Record High

The Rockefeller family built Standard Oil of New York, which later became Mobil, a predecessor to Exxon/Mobil.

January 31, 2011

Associated Press - Exxon Mobil earned $9.25 billion in the last three months of 2010, its most profitable quarter since the record third quarter of 2008.

The largest publicly traded oil company said Monday that net income grew 53 percent in the fourth quarter as it produced more oil to take advantage of higher prices.

On a per-share basis, net income was $1.85 per share. In the year-ago quarter, Exxon earned $6.05 billion, or $1.27 per share. Exxon set a record for quarterly net income by a publicly traded company of $14.83 billion in the July-September period in 2008.

Revenue increased 17 percent to $105 billion.

The results beat Wall Street expectations of $1.62 per share on revenue of $99.1 billion, according to FactSet.

Oil companies' profits surged in the fourth quarter as the world consumed more petroleum and oil prices rose 12 percent to an average of $85.14 per barrel. Higher prices made production operations more profitable. Increased demand boosted margins at refineries.

Exxon cranked up production by 19 percent. Its Exploration and production operations posted income of $1.3 billion in the U.S. and $6.2 billion internationally. Downstream operations, which include refineries, reported earnings of $1.2 billion after losing money a year ago. And Exxon's chemicals business reported profits of $1.1 billion.

Last week, Chevron Corp. said net income soared 72 percent to $5.3 billion for the quarter while ConocoPhillips reported a 54-percent jump. BP reports quarterly earnings on Tuesday and Royal Dutch Shell releases its report Thursday.

For the full year, Exxon Mobil Corp. said it earned $30.5 billion, or $6.22 per share, compared with $19.3 billion, or $3.98 per share, in 2009. Annual revenue increased 32 percent to $383 billion.

Shares added 75 cents, less than 1 percent, to $79.74 in premarket trading.

Oil Hits 26-month High to End 2010 Up 15 Percent

January 1, 2011

Reuters - Oil prices hit a 26-month high over $92 a barrel on Friday, closing the year up 15 percent on expectations that the economic recovery will drive demand growth next year and send prices into triple digits.

Strong growth from Asia, especially China, and a rebound in demand from recovering economies elsewhere fueled a four-month rally that knocked crude over the $70-$80 range it held for much of the year.

U.S. crude oil futures surged to a 2010 high on Friday, settling up $1.54 a barrel at $91.38 a barrel, after touching $92.06, the highest level since October 7, 2008. The settlement marked the largest end-year price since 2007.

London Brent gained $1.66 to settle at $94.75 a barrel, its highest end-December settlement since 2007 and up nearly 22 percent on the year. Global output jumped 2.2 million barrels per day (bpd), according to a Reuters poll, the biggest increase since 2004, and another healthy 1.5 million bpd gain is forecast for next year.

While many experts say oil could break $100 a barrel in the new year, they don't expect a surge to levels near $150 seen in 2008, when crude first broke into triple digits. The Organization of the Petroleum Exporting Countries would step in to cool off markets if they headed into territory that could endanger the global economic recovery, analysts said.

"At some point, I would expect OPEC to increase production, whether through an extra cargo here or there to cash in on high prices or whether by a more concerted effort to calm people down," said Tim Evans, analyst for Citi Futures Perspective.

Recent gains in the dollar could also help cap oil's momentum by increasing the cost of dollar-denominated currencies for holders of other currencies.

U.S. crude averaged $79.61 a barrel for the year, second only to 2008's record $99.75. Crude shot to a high of $147 a barrel in July of that year, before the global recession hit demand and sent prices below $33.

Cold weather in the United States and Europe and OPEC's decision to keep production levels steady earlier this month have added to bullish sentiment this month. Analysts are watching to see how much of the recent rally has been caused by seasonal weather demand and how much has been driven by more structural consumption growth.

Speculators betting the economic recovery will boost demand have poured into oil markets, with net long positions held by money managers in U.S. oil futures hitting fresh records in December.

U.S. crude rallied back from early losses on Friday in light holiday trade of about 275,000 contracts -- about half the level seen over the past 30 days -- bouncing off lows near $89 a barrel.

"We're seeing exaggerated price swings because of low volume of trade but there is technical support around $89 a barrel and the rally will continue to march into next year," said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut.

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We may never know for sure the combination of circumstances that brought on energy crisis of 2008. But one factor was almost certainly the Commodity Futures Modernization Act of 2000, which allowed unprecedented levels of speculation in oil futures by investment banks and pension funds, bringing the familiar boom-bust cycle home to the gas pump. - Drill Now? Try Regulate Now., Wall Street Journal, April 7, 2010

To lower international food prices and protect our social interests, the Commodities Futures Trading Commission must use its authority to curb excessive speculation in commodities futures and re-establish strict position limits on speculators (which were successful until removed by the Commodity Futures Modernization Act of 2000). We must regulate and bring transparency to all trading. We can also removing damaging speculative influence on commodities prices by prohibiting participation in commodities markets by those who do not produce, manufacture, or take physical delivery of the commodities. We must create a solidarity economy that puts compassion and care for one another ahead of short-term profits, in the United States and around the world. - The world food crisis: what is behind it and what we can do, WorldHunger.org, October 23, 2008

The surge in world food prices can be attributed to the “financialisation” of commodities due to the Commodities Futures Modernization Act of 2000. The game changed for commodities the minute the legislation passed -- ten years ago. That doesn't explain the surge this year but it does explain the increased volatility of the last decade. - Don't Blame Bernanke: Here's Who's REALLY To Blame For Surging Food Prices, Business Insider, October 12, 2010

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