Oil giants lost billions as pandemic crushed demand for fuel

Two American oil giants lost more than USD 9 billion in the second quarter as the pandemic kept households on lockdown, cutting a gaping hole into a once-thriving business as the need for oil diminished around the world.

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

The quarter was one of the worst on record for the oil industry. The price of a barrel of benchmark US crude fell below USD 0 in April, a stunning downfall that had not before been seen in the industry.

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Producers had been pumping far more oil than the world was using as global travel all but shut down, and storage tanks were filling up.

Oil prices have recovered somewhat since, but have been stuck at around USD 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 US oil industry lost more than 100,000 jobs since February, with 45,000 of those jobs shed by upstream oil and gas companies in Texas alone, according to Rystad Energy, a consulting firm.

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“Simply put, the demand destruction in the second quarter was unprecedented in the history of modern oil markets,” said Neil Chapman, senior vice president at Exxon, 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.