Exxon, Chevron Q2 results lift energy ETFs

ExxonMobil and Chevron reported second-quarter profit gains as oil prices rose amid renewed tensions in the Middle East. Their results influenced major energy exchange-traded funds where the two companies are the largest holdings.

ExxonMobil reported earnings per share of $3.52 on revenue of $116.02 billion, missing consensus EPS of $3.60 while topping revenue estimates of $97.8 billion. Exxon attributed the EPS shortfall to difficulty forecasting prices amid disruptions in global crude and product markets. Worldwide production reached about 4.5 million barrels per day, its highest level in more than 20 years excluding periods of Middle East disruption, with record output in the Permian Basin. Exxon’s refining unit posted roughly $5.5 billion in second-quarter earnings after a $1.3 billion loss in the prior quarter. Exxon’s shares fell about 1.9% after the report.

Chevron reported EPS of $6.06 on $70 billion in revenue, above analyst expectations of $5.56 and $62 billion. The company attributed profit growth to higher oil prices and supply disruptions tied to the Middle East conflict, with gains across upstream and downstream operations. Refining profit rose to $4.9 billion from $737 million a year earlier, and exploration and production income increased to $7.9 billion from $5.4 billion. Chevron’s stock gained about 1.7% following the announcement.

Major energy ETFs held large allocations to the two integrated majors. The State Street Energy Select Sector SPDR ETF combines Exxon and Chevron for more than 36% of its weight and ticked up modestly after the results. The Vanguard Energy ETF allocates just under 35% to Exxon and Chevron and posted a small gain. XLE has returned about 33.7% year to date and recorded roughly $3.04 billion in net inflows this year. VDE has returned about 33.7% year to date with inflows near $733.9 million.

Smaller and specialized funds reflected the majors’ reports. The Texas Capital Texas Oil Index ETF lists Exxon as its largest holding at a 7.64% weight and Chevron at 4.57%; that fund rose about 1.08% after the reports and has gained roughly 32.15% year to date. In a major high-dividend ETF, Exxon is the largest holding at 7.68% and Chevron is the third largest at 5.78%. That dividend-focused fund was flat after the announcements and has returned about 19.38% this year with net inflows near $670.0 million. Exxon has raised its annual dividend for 43 consecutive years and Chevron for 39 consecutive years.

Leveraged products amplified the market reaction. A 2x daily energy bull ETF holding the two majors at more than 30% combined rose about 0.33% after the earnings, while a 2x ETF tied specifically to Exxon fell about 3.9% after Exxon’s EPS miss; the 2x energy fund held about $226.3 million in assets.

Traders and funds adjusted positions in response to the quarterly reports and to higher oil prices tied to the Middle East tensions, with flows into and performance of energy ETFs moving alongside changes in the two stocks.