NEW YORK – The world’s largest oil firms are showing steep decreases in quarterly profits as energy demand remains low, the Washington Post reports.
Exxon Mobil revealed last week that its third-quarter profit sharply dropped 68 percent to reach $4.73 billion, down from $14.8 billion during the same July to September period in 2008 when crude oil prices closed in on $150 a barrel. Meanwhile, Royal Dutch Shell also reported third-quarter profit declines of 62 percent to reach $3.25 billion with sales falling 43 percent.
Declining diesel and gasoline prices contributed to the downward spiral of Exxon’s refining business, which saw profits plummet 89 percent during July to September. Shell had refinery earnings decrease 47 percent, attributing the decline to lower demand. Shell said that this would make profit margins stay slim in “the short and medium turn,” making a fast turnaround unlikely.
“I think it’s well advertised that refining conditions going forward are not going to be as stellar as they were in the hallmark period between 2004 and 2007,” said Robbert Van Batenburg, head of equity research at Louis Capital Markets. “It’s something that’s going to be here to stay.”
During this same period, oil futures dropped nearly $50 a barrel, averaging $59 a barrel in New York this year, compared with $99.75 last year. “If you look at the whole picture for all the big oils, the only thing that’s really helped them is that the oil price has come off the floor,” said John Parry, an analyst with IHS Herold. “You’re still a long way from catching up to where the industry was back in ’07 and ’08.”