Energy-related exchange traded funds continued to push higher as Exxon Mobil Corp (XOM) and Chevron Corp (CVX) revealed that elevated crude oil prices are helping energy companies enjoy big gains.
Among the best-performing non-leveraged ETFs of Tuesday, the SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES) advanced 4.6%, the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP) was up 3.7%, the Invesco Dynamic Energy Exploration & Production Portfolio (NYSEArca: PXE) gained 4.0%, and the Invesco S&P SmallCap Energy ETF (NasdaqGM: PSCE) added 4.4%. The widely observed Energy Select Sector SPDR Fund (NYSEArca: XLE) increased 3.5%.
Exxon Mobil Corp. on Tuesday revealed $23 billion in profits for 2021, its best total since 2014, along with $8.9 billion in profits over the fourth quarter, the Wall Street Journal reports.
Exxon’s announcement comes after Chevron Corp. last week reported its most profitable year since 2014 as well, bringing in $15.6 billion in net income over 2021 and $5.1 billion for the fourth quarter.
Looking ahead, the largest European oil companies, Shell PLC and BP PLC, are also expected to post stellar annual results when they report in the following days.
Along with a great 2021, Exxon and Chevron are also projecting a multiyear upswing for the energy industry as oil and gas demand rebounds from the COVID-19 pandemic-induced shutdowns while investment in new production slows in face of greater scrutiny over heavy polluting industries.
So far in 2022, the S&P 500 Energy Sector has gained almost 19% while the broader S&P 500 is about 5% lower. The great start to 2022 comes after the sector enjoyed great gains for 2021 as well.
“Our effective pandemic response, focused investments during the down cycle and structural cost savings positioned us to realize the full benefit of the market recovery last year,” Exxon CEO Darren Woods said.
The energy companies are capitalizing on rising commodity prices as demand for some fuels, like U.S. gasoline consumption, have gone above pre-pandemic levels.
Moreover, 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. “Many of the leading companies have taken aggressive steps to win back investors.”