Exxon and Chevron hit record highs on diesel profits as oil settled at $104 and gold fell to a one-year low
The two oil majors were among the few winners on a down day after refining margins lifted profits. WTI rose $2.12 a barrel, gold dropped more than 3%, and the 10-year Treasury yield eased to 4.94% ahead of next week's midterms.
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On a day when the Nasdaq fell 2.9%, the energy sector went the other way. The two largest U.S. oil companies reported profits that left analysts' estimates far behind, and crude oil climbed back above $104 a barrel.
Exxon and Chevron: refining did the work
Exxon Mobil said third-quarter profit doubled to $15.4 billion, or $3.72 a share, from $7.5 billion, or $1.76 a share, a year earlier, CNBC reported. Excluding one-time items, it earned $4.23 a share, well ahead of expectations. NBC News said the company also raised its dividend.
Chevron's net income rose nearly 200% to $9.9 billion, or $5.06 a share, from $3.5 billion, or $1.82 a share. Adjusted earnings of $5.28 a share beat the $4.89 LSEG consensus, and revenue of $67.8 billion topped the $61.6 billion estimate, according to CNBC.
Both stocks touched all-time highs on Friday, CNBC said. Exxon closed up 2.2% at $187.25, according to Reuters and Yahoo Finance data, and Chevron also finished higher, at $235.52.
The driver was diesel. U.S. refineries ran at full capacity to supply importers after attacks on refineries in Russia and the Middle East cut global capacity, CNBC reported. The U.S. average diesel price was $6.32 a gallon on Friday, up more than 70% from a year earlier, according to AAA.
"Frankly, diesel is the key crunch point here because it is so critical to economic growth." - Darren Woods, Exxon Mobil CEO, to CNBC
Chevron CEO Mike Wirth struck a similar note. "The system is under stress," he told CNBC. "We remain in an environment that is fairly fragile."
The contrast with the rest of the market was stark. The Energy Select Sector SPDR ETF rose 1.8% on Friday while the Technology Select Sector SPDR fell 4.8%, according to State of the Market data, and the Dow, with its heavier weighting in old-economy companies, ended October with a monthly gain while the Nasdaq did not, Reuters said.
Oil: up $2.12 on the day
West Texas Intermediate crude for December delivery settled $2.12 higher at $104.12 a barrel, Newsquawk reported, after trading between $102.43 and $104.99. That was up from Thursday's $102.00 settlement, reported by Reuters.
Newsquawk said prices dipped at times on reports of progress toward a U.S.-Iran deal, with Qatari mediators returning to Tehran, but still settled firmly higher as traders waited to see whether President Trump orders strikes on Iran after the midterm elections. Baker Hughes said the number of U.S. oil rigs rose by 2 to 462 this week.
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Gold slid to a one-year low
Gold moved against the usual pattern for a risk-off day. Spot gold traded near $3,875 an ounce late Friday, down more than 3%, according to market data providers, and Investopedia said the metal hit a one-year low. GoldPrice.com data showed the previous 52-week low at $3,951.10. The SPDR Gold Shares ETF fell 3.4%, according to State of the Market data.
Yields eased as stocks fell
Treasuries gained as money left technology stocks. The 10-year yield ended at 4.94%, down from 4.98% on Thursday, and the 2-year yield fell to 4.56% from 4.61%, according to Treasury Department data. The 30-year yield finished at 5.31%.
The Federal Reserve held rates at 3.75% to 4% on Wednesday, and Thursday's inflation data showed the PCE price index up 3.6% from a year earlier. CME's FedWatch tool put the odds of a quarter-point hike at the Dec. 9 meeting at 79.6% on Thursday, IBTimes reported.
What carries into next week
Next week brings Apple's results on Monday and the midterm elections on Tuesday, with oil traders focused on what follows for U.S. policy toward Iran. For energy companies, the question after Friday is how long refining margins stay this wide; for bonds and gold, it is whether the shift out of tech continues into November.
