Oil giants lose billions as global demand plunges

NEW YORK — Two U.S. oil giants lost more than $9 billion US in the second quarter as the pandemic kept households on lockdown, cutting a gaping hole into a oncethriving business as the need for oil diminished around the world.

Exxon lost $1.1 billion in the second quarter, and the Irving, Texas-based oil producer brought in $32.6 billion in revenue, less than half of what it brought in at the same time last year. Chevron Corp. lost $8.27 billion during the quarter, a sharp contrast to the $4.3 billion it earned a year ago.

The quarter was one of the worst on record for the oil industry. The price of a barrel of benchmark U.S. crude fell below $0 in April, a downfall not before been seen in the industry.

Producers had been pumping far more oil than the world was using as global travel all but shut down and storage tanks filled up. Petroleum consumption fell to a more than 30-year low in April, according to the U.S. Energy Information Administration.

Oil prices have recovered, but have been stuck at about $40 a barrel for weeks, fetching 30 per cent less than a barrel did a year ago and well below what most producers need to make ends meet. As a result, the U.S. oil industry lost more than 100,000 jobs since February, with 45,000 shed by upstream oil and gas companies in Texas alone, according to Rystad Energy, a consulting firm.

“Simply put, the demand destruction in the second quarter was unprecedented in the history of modern oil markets,” Neil Chapman, senior vice-president at Exxon, said on a conference call with investors Friday. “To put it in context, absolute demand fell to levels we hadn’t seen in nearly 20 years. We’ve never seen a decline of this magnitude and pace before, even relative to the historic periods of demand volatility following the global financial crisis and as far back as the 1970s oil and energy crisis.”

Exxon expects gasoline and diesel fuel consumption to rebound to levels similar to last year in the fourth quarter, but jet fuel will take longer to recover, Chapman said.

Exxon said in April that it would cut its capital spending budget this year by 30 per cent, to $23 billion, and its cash operating expenses by 15 per cent. The company is on track to exceed that goal and is exploring other ways to cut expenses, including evaluating its workforce around the world, Chapman said.