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SUNDAY, AUGUST 2, 2020
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NEW YORK (AP) — Two United
States (US) oil giants lost more
than USD9 billion in the second
quarter as the pandemic kept
households on lockdown, cutting
a gaping hole into a once-thriving
business as the need for oil
diminished around the world.
Exxon lost USD1.1 billion in the
second quarter, and the Irving,
Texas-based oil producer brought
in USD32.6 billion in revenue, less
than half of what it brought in at
the same time last year.
Chevron Corp lost USD8.27
billion during the quarter, a sharp
contrast to the USD4.3 billion it
earned a year ago.
The quarter was one of the
worst on record for the oil industry.
The price of a barrel of benchmark
US crude fell below USD0 in April,
a stunning downfall that had not
before been seen in the industry.
Producers had been pumping
far more oil than the world was
using as global travel all but shut
down, and storage tanks were
illing up.
Petroleum consumption fell
to a more than 30-year low in
April, according to the US Energy
Information Administration.
Oil prices have recovered
somewhat since, but have been
stuck at around USD40 a barrel for
weeks, fetching 30 per cent less
than a barrel did a year ago and
well below what most producers
need to make ends meet.
As a result, the US oil industry
lost more than 100,000 jobs since
February, with 45,000 of those
jobs shed by upstream oil and
gas companies in Texas alone,
according to Rystad Energy, a
consulting irm.
“Simply put, the demand de-
struction in the second quarter was
unprecedented in the history of
modern oil markets,” said Exxon Se-
nior Vice President Neil Chapman,
on a conference call with investors
on Friday. “To put it in context, abso-
lute demand fell to levels we hadn’t
seen in nearly 20 years. We’ve never
seen a decline of this magnitude
and pace before, even relative to the
historic periods of demand volatility
following the global inancial crisis
and as far back as the 1970s oil and
energy crisis.”
Exxon
expects
gasoline
and diesel fuel consumption to
rebound to levels similar to last
year in the fourth quarter, but jet
fuel will take longer to recover,
Chapman said.
Exxon Mobil Corp announced
in April that it would cut its capital
spending budget by 30 per cent,
to USD23 billion, and its cash
operating expenses by 15 per
cent, in 2020. The company is
on track to exceed that goal and
is exploring other ways to cut
expenses, including evaluating
its workforce around the world,
Chapman said.
The pandemic is also making
some of Exxon’s work more
expensive as it tries to keep
employees safe. “We’ve had
to charge planes to move our
rotating operating staff all over
the globe without the availability
of commercial planes,” Chapman
said. “We’ve had to lease hotels
in multiple cities to quarantine
our folks before they start their
30-day rotations.”
Exxon produced 3.6 million
barrels of oil-equivalent, down
seven per cent from last year.
That included a 12 per cent drop
in natural gas production. But it
boosted production in the Permian
Basin by nine per cent compared
to last year.
KUALALUMPUR(BERNAMA)-Goldfu-
tures contract on Bursa Malaysia De-
rivatives will likely experience muted
trading next week as traders weigh
mixed sentiments arising from exter-
nal developments.
Phillip Futures Sdn Bhd deal-
er Ong Su Ling said while gold prices
would remain supported by the on-
going United States (US)-China ten-
sions and uncertainties surrounding
global economic growth, there is
also a possibility for gold prices to
trade lower due to a technical cor-
rection as market players await more
clues from US economic data, as
well as corporate earnings.
“Furthermore, lack of liquidity
(trading volume) due to fewer play-
ers in the Bursa Malaysia gold futures
market may also cause the local mar-
ket to end with no volume, as well
as the possibility that many inves-
tors are more focussed on US dollar
gold,” Ong told
Bernama
.
Fresh off achieving its all-time
high of USD1,980-level this week,
OANDA Asia-Paciic Senior Mar-
ket Analyst Jeffrey Halley said the
underlying bullish case for gold
remained intact, given the liquidity-
ready Federal Reserve, negative real
yields across the US yield curve and
a lower US dollar.
He said the precious metal now
has a resistance to overcome and
test the USD2,000 an ounce re-
gion, after it traced out a double
top at USD1,981 an ounce, which
would provide stern resistance to
short-term rallies.
“Given the volatility of the past
two days, initial support is now some-
what distant at USD1,941 an ounce,”
he added.
During the week just ended,
the local gold futures were un-
changed for most of the week, ex-
cept on Thursday.
On a Thursday-to-Friday ba-
sis, July 2020 gained 418 ticks
to
MYR266.30
a
gramme,
while August 2020, September
2020 and October 2020 all added
165 ticks to MYR256, MYR254.45
and MYR254.35 a gramme.
Oil giants lost billions
as pandemic crushed
demand for fuel
ExxonMobil logo shown at the New York Stock Exchange. PHOTO: AP
San Ramon, California-based
Chevron brought in USD13.49
billion in revenue, about a third of
what it brought in last year.
Most of Chevron’s losses hit its
upstream operations, or oil and gas
production, including a USD2.1 bil-
lion hit to its US upstream operations
and a USD4 billion loss in its interna-
tional upstream operations. Some of
its assets lost value. Chevron wrote
off a USD2.6 billion investment in
Venezuela noting a challenging op-
erating environment there and say-
ing it’s unclear whether the company
would recover its investment.
“While we are disappointed by
the impairment in Venezuela, we
intend to maintain the presence
in the country and resume normal
operations one day,” said Chevron
Chief Financial Oficer and Vice
President Pierre Breber in a
conference call with investors.
“With health, economic and social
crises all happening at the same
time, this is a challenging quarter
for Chevron and its stakeholders,”
Breber said.
Elsewhere, Phillips 66, the
Houston-based oil reining and
logistics company, lost USD141
million during the quarter,
reversing a year-earlier proit.
Despite the rough quarter,
larger companies such as Exxon
and Chevron have an advantage
over smaller producers because
they presumably have better
balance sheets and access to
capital markets, said CFRA Energy
Equity Analyst Stewart Glickman.
“The biggest unknown is what
happens with the price deck, and
that’s really anybody’s guess,” said
Glickman, adding that while prices
have stabilised at around USD40,
they could fall into the 30s as COVID-
19cases rise. “I’mnot really optimistic
about the path of oil prices.”
Gold futures to stay muted next week
A shopkeeper at a jewellery shop. PHOTO: AP