Energy ETFs rally as Exxon reports higher earnings on high oil prices
EEnergy-related exchange-traded funds continued to advance as Exxon Mobil Corp (XOM) and Chevron Corp (CVX) revealed that high crude oil prices helped energy companies make strong gains.
Among the best performing unleveraged ETFs on Tuesday, the SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES) increased by 4.6%, the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP) increased by 3.7%, the Invesco Dynamic Energy Exploration and Production Portfolio (NYSEArca: PXE) gained 4.0% and the Invesco S&P SmallCap Energy ETF (NasdaqGM: PSCE) added 4.4%. The widely observedSPDR Energy Select Sector Fund (NYSEArca: XLE) increased by 3.5%.
Exxon Mobil Corp. on Tuesday revealed $23 billion in profit for 2021, its best total since 2014, as well as $8.9 billion in fourth-quarter profit, the Wall Street Journal reports.
Exxon’s announcement comes after Chevron Corp. also reported last week its most profitable year since 2014, generating net income of $15.6 billion in 2021 and $5.1 billion for the fourth quarter.
Looking ahead, Europe’s largest oil companies, Shell PLC and BP PLC, are also expected to report bumper annual results when released in the following days.
Alongside a strong 2021, Exxon and Chevron are also forecasting a multi-year recovery for the energy industry as demand for oil and gas rebounds from COVID-19 pandemic-induced shutdowns while investment in the new production are slowing in the face of greater scrutiny of polluting heavy industries.
So far in 2022, the S&P 500 energy sector has gained almost 19%, while the broader S&P 500 is down about 5%. The strong start to 2022 comes after the sector also posted big gains for 2021.
“Our effective pandemic response, targeted investments during the down cycle and structural cost savings allowed us to take full advantage of the market rally last year,” said Exxon CEO Darren Woods.
Energy companies are benefiting from higher commodity prices as demand for some fuels, such as gasoline consumption in the United States, has exceeded pre-pandemic levels.
Additionally, many energy companies are also returning value to investors as they plan to moderate growth and return more cash to shareholders.
“The growth experiment is over,” Jeff Wyll, senior energy analyst at Neuberger Berman, told the WSJ. “A lot of big companies have taken aggressive steps to win back investors.”
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