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Crude oil futures closed Friday at their lowest level in three weeks, capping the biggest weekly declines since October for WTI and Brent, which faltered after settling Tuesday at their best levels since November.
America’s twin energy towers, Exxon Mobil (XOM) and Chevron (CVX), reported better-than-expected fourth-quarter earnings and posted their second-highest annual profits in a decade last year — $36 billion and $21.4 billion, respectively — down more than a third from record levels in the 2022, but still well above historical averages.
Both companies said they plan to aggressively increase production from the Permian Basin this year, a potential early sign that U.S. oil production could beat expectations in 2024 as it did in 2023, Bloomberg reported.
Chevron (CVX) said it is targeting 10% growth in the Permian this year, which would allow it to pump 1 million bbl/d from the region in 2025; “Our growth is probably higher than the basin average, but it is representative of our level of activity and the level of activity of our partners,” Chief Financial Officer Pierre Breber told Bloomberg.
Exxon’s (XOM) Permian production rose 12% in 2023, exceeding its forecast of 600,000 bbl/d, and the company will become by far the basin’s largest producer once it completes its purchase of Pioneer Natural Resources by the middle of the year; excluding Pioneer, Exxon expects a nearly 7% increase to 650,000 bbl/d this year.
Nymex crude (CL1:COM) for March delivery fell 2.1% on Friday to $72.28/bbl, while April Brent crude (CO1:COM) fell 1.7% on Friday to 77 $.33/bbl; for the week, WTI -7.3% and Brent -6.8%the largest one-week net and percentage drop for both benchmarks since early October.
ETFs: (NYSEARCA:USE), (BNO), (UCO), (SCO),(USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)
A strong U.S. jobs report reducing the likelihood of interest rate cuts in March by the Federal Reserve, continued economic headwinds in China and the possibility of some easing of tensions in the Middle East have helped reduce crude oil prices this week.
Monday’s trade could be affected by U.S. airstrikes launched Friday evening against Iran-backed militias in Syria and Iraq, in response to the drone attack that killed three American soldiers.
Analysts at JP Morgan still see oil heading towards $80, forecasting a 1.5 million bbl/d increase in global oil demand this year, above client consensus of around 1 million of bbl/day.
“We believe the lows are behind us and we continue to see Brent trading at $80 by May, with a clear possibility that crude will surpass our upside price target,” the bank said, noting that “its constructive prospects depend heavily on our optimism.” view on demand, particularly on China.”
The Energy Select Sector SPDR ETF (XLE) closed out the week -0.9%.
Top 5 Energy and Natural Resource Gains: Plug Power (PLUG) +37%Ur-Energy (URG) +14.8%Nuclear Energy (SMR) +14.5%Brooge Holdings (BROG) +11.1%NexGen Energy (NXE) +10.3%.
Top 10 Declining Countries in Energy and Natural Resources: Meta Materials (MMAT) -41.6%Sigma lithium (SGML) -25.8%Piedmont Lithium (PLL) -22.2%SandRidge Energy (SD) -19.7%Borr Drilling (BORR) -18.8%NOVEMBER (NOV) -16%W&T Offshore (WTI) -14.4%Weatherford International (WFRD) -13.8%Montauk Renewables (MNTK) -13.6%Nine Energy Services (NINE) -13.4%.
Source: Barchart.com