Tags: Chevron | oil | demand | CVX

Chevron Profits On Strong Oil Demand

By    |   Wednesday, 09 Nov 2011 03:07 PM

Global oil company Chevron (CVX) is rolling in both profits and revenue thanks to high global crude prices. Demand for crude oil has been heavy for years, as rising superpowers such as China demand more oil to feed growing economies. Political upheaval in the Middle East has jacked up prices as well, and all that spells money for Chevron.

The company reported earnings of $7.8 billion ($3.92 per share) for the third quarter 2011, up from $3.8 billion ($1.87 per share) in the same quarter of 2010. Sales and other operating revenues in the third quarter of 2011 hit $61 billion, up from $48 billion in the same period a year earlier, mainly due to higher prices for the company's crude oil and refined products.

Upstream activities, industry jargon for exploring and drilling, do well when crude prices rise while downstream activities, essentially refining, do well when prices at the pump and items such as kerosene or jet fuel rise in price.

Earnings from both have been good for Chevron. "Current quarter earnings for our upstream operations benefited from higher crude oil prices on world markets. At the same time, gains on asset sales and improved margins for refined petroleum products contributed to increased earnings for our downstream businesses," Chevron Chairman and CEO John Watson says in the company's third-quarter earnings statement.

Watch the economy

Oil prices, however, often serve as a barometer for the global economy, which if cooling requires less crude. Fears of a global slowdown or even a return to a recession in parts of the developed world could curb demand for crude oil and refined product.

Furthermore, big companies such as Chevron must make sure they have a healthy supply of reserves, and plenty of demand, especially in new and growing markets.

"Chevron is placing bets on the growth of energy demand in Asia to drive its future growth," say analysts at Trefis, a financial analysis firm.

Wall Street banks are generally optimistic on the company. In October, Oppenheimer reiterated an outperform recommendation on the stock while Barclays Capital in August said it was sticking with an overweight recommendation.

Also in August, Argus reiterated a buy recommendation, while UBS did the same in May. In late October, however, Standpoint Research downgraded its recommendation on Chevron stock to hold from buy.

The company will report fourth quarter results on Jan. 27.

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
Companies
Global oil company Chevron (CVX) is rolling in both profits and revenue thanks to high global crude prices. Demand for crude oil has been heavy for years, as rising superpowers such as China demand more oil to feed growing economies. Political upheaval in the Middle East...
Chevron,oil,demand,CVX
394
2011-07-09
Wednesday, 09 Nov 2011 03:07 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved