Big Oil faces a slowing economy and renewed trade war
Illustration: Sarah Grillo/Axios
Oil and natural gas companies are staring down the barrel of a slowing economy, President Trump's on-again-off-again Chinese trade war, persistently low oil prices that plunged yesterday, and even lower natural gas prices.
Where it stands: Big Oil's second-quarter earnings are mixed this week. European majors Total, Eni and Shell reported large drops in profits while BP "bucked the trend." On this side of the Atlantic, ExxonMobil faced a 21% drop in quarterly profit while Chevron saw a 26.3% rise in its quarterly profits, per Reuters.
One level deeper: The oil market already took a hit after the Federal Reserve cut rates on Wednesday. A strong dollar typically weakens oil prices. Meanwhile, a lack of infrastructure like pipelines is hitting natural gas prices.
"For companies, this means a long global oil market is weighing on crude prices at the same time that U.S. infrastructure shortfalls are weighing on gas prices."— Kevin Book, managing director, ClearView Energy Partners
What's next: More of the same.
- "Growth in oil supply is expected to accelerate next year as global production increases, keeping crude mired in a bear market," The Wall Street Journal reports.
- "At the same time, anxiety about trade tensions crimping global growth and weakening demand has bolstered concern about a supply glut in recent months, investors say."
But, but, but: Persistently low oil prices is good news for American consumers. That will likely make President Trump content in this area and keep tweets about oil prices at bay — which is probably good for everybody.
Go deeper: The forever trade war