Exxon Mobil (XOM:NYSE), the world’s largest publicly traded oil company, reported that profits from July to September dropped 68% to $4.73 billion, or 98 cents per share. The quarterly results were below forecasts.
Rex Tillerson, Exxon's chairman, said the results were "impacted by lower commodity prices and weak product margins. Tillerson also commented “ExxonMobil’s industry leading financial strength has allowed us to continue to invest across the economic cycle focusing on world class opportunities.”
CNNMoney reports that last year Exxon reported the largest annual profit in U.S. history last year, making $45.22 billion on the back of record crude oil prices. But the company's earnings have declined along with oil prices as the global economy contracted.
Conoco Phillips reported third quarter earnings that beat expectations while Petrochina said its revenue missed the market consensus.
Even Royal Dutch Shell reported a decline in oil-related revenue. The BBC reports the company’s profit for the three months to September fell 73% to $3 billion. “We are not expecting a quick recovery," Shell chief executive Peter Voser said.
However, oil prices rose in early trading with evidence the economy is picking up. Crude oil inventories remain at the upper limit. At the pump, the national average price of unleaded gasoline rose from Wednesday's $2.683 per gallon to $2.691 per gallon.
It was only in July 2008 that crude oil reached $150 a barrel. Some analysts predict we will see the price of crude oil reach $100 a barrel. If it climbs this high, it’s due to increased demand and a decline in production from new wells. In fact, according to the Energy Tribune, a report by the International Energy Agency showed that oil production from operating wells has been declining by 9.1% per year.
The Gerson Lehrman Group, a network of consultants, physicians, scientists, engineers, attorneys, market researchers, and other professionals from around the world, suggests that what makes hyperinflation even more of an impending problem is the possibility that crude oil prices may now increase supported by a combination of geopolitical issues and the decline of the U.S. dollar.
Currency expert Mike Sankowski, editor of Currency Profits Trader, agrees. “Our forecast is that we will see a weaker U.S. dollar against the major currencies over the next six months at a minimum,” says Sankowski.
Part of the reason for this weakness is because the U.S. stock market has recovered some of its value, so demand for U.S. dollars will go down due to a wealth effect among top earners in the U.S. In other words, as the economy appears headed toward recovery, people are saving less money.
A recovery in the economy means a return to stocks. “A higher stock market means a lower U.S. dollar,” explains Sankowski.
Mike tells readers, “We will be prudent with our risk – and closely watch the stock market for weakness. But as long as the U.S. stock market remains high, expect the dollar to be weak.”
Learn more about what Editor Mike Sankowski has to say about profiting from the greenback and other investment strategies. Visit Currency Profits Trader for insights into trading currencies.
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