The energy sector is reeling from the effects of the COVID-19 pandemic, with a good number of companies going under as other post disappointing financial results. Third-quarter earnings in the sector are poised to contract 113% from the same period last year.
Shrinking Oil Profits
Leading the foray of disappointing results in the sector are super major oil producers, Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX). While the two did beat earnings estimates in the quarter, a slump in oil prices at the back of declining global demand continues to compound their woes.
Exxon Mobil reported a third straight quarter of losses at 18 cents narrower than 28 cents expected. Its revenues were down 29% to $46.2 billion. Chevron posted a surprise profit of 11 cents a share but below a $1.55, a share profit reported last year.
Energy ETF In Focus
Amid the ever declining sentiments in the energy industry, a number of ETFs remain in focus. They include Energy Select Sector SPDR XLE, the third largest and most popular ETF in the energy space. Investors are also paying close watch to iShares U.S. Energy ETF IYE, which tracks the Dow Jones U.S Oil and Gas Index and Vanguard Energy ETF VDE.
Amid the bearish sentiment in the energy sector, two inverse energy funds have continued to outperform the market. Direxion Daily S&P Oil & Gas Exploration & Production Bear 2x Shares is already up by more than 30% since August, while Direxion Daily Energy Bear 2X Shares ERY is up by 40%.
Venezuela Surging Inventories
The U.S energy sector is not the only one in turmoil. Venezuela’s energy sector is on the brink of collapse as the country continues to feel the full effects of sanctions from the U.S. Oil production in the oil-rich nation has already shrunk to a multi-decade low as Washington continues to pile pressure on the Maduro regime.
Oil inventory levels have risen significantly, alluding to a lack of market amid sanctions imposed on the country. Since October, inventories have surged 84% to 10.6 million barrels. The high inventory levels can be attributed to the country’s inability to access the international oil markets.
