ExxonMobil, Chevron Q1 earnings boosted by higher oil prices

ExxonMobil and Chevron posted higher first-quarter earnings today as an uptick in oil prices following OPEC's production agreement boosts the petroleum sector. Net income at ExxonMobil jumped 16 percent from the year-ago period to USD 4.7 billion, while revenues rose 16.3 percent to USD 68.2 billion.

Higher oil prices lifted ExxonMobil's exploration and production division.

Prices got another boost by last week's meeting in Saudi Arabia where OPEC nations and Russia signalled they would keep limiting production.

At Chevron, earnings surged 35.6 percent to USD 3.6 billion compared to the first three months of 2017, while revenues rose 14.1 percent to USD 36.0 billion.

US oil futures lingered above USD 60 a barrel for most of the first quarter, about USD 10 to USD 15 more than a year-ago, and some analysts have begun to caution that sustained higher prices would boost inflation and could slow global growth.

The World Bank projects oil prices will average USD 65 this year.

ExxonMobil also cited higher natural gas prices as a factor in the profit improvement, with the market strengthened by cold weather in the US and Europe.

"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," chief executive Darren Woods said.

The oil company earnings follow a stream of reports from other industrial companies this week that underscored new cost challenges emanating from higher commodity prices.

American Airlines chief executive Doug Parker described higher fuel prices as a major earnings challenge as he commented on the company's results yesterday.

He said the carrier would need to raise ticket prices if the situation proves lasting. Fuel is the second biggest cost in the airline industry after labour.

Others, including freight rail company Union Pacific and UPS, also reported a significant jump in fuel costs in the first quarter.

Oxford Economics yesterday said it upgraded its assumption for oil prices, which it projects will peak at USD 75 a barrel before retreating to around USD 67 a barrel by the end of 2019.

But a scenario of prices at USD 85 and lingering at that level through the end of 2020 would reduce global growth by 0.6 percent, with the biggest hit regions being emerging economies such as China, India, Indonesia and Turkey, according to Oxford, a forecasting and quantitative analysis firm.

Shares of ExxonMobil fell 2.2 percent to USD 79.10, while Chevron rose 1.5 percent to USD 126.12.