Exxon, Chevron Plans to Raise Spending Lift S&P Energy Sector

Energy stocks are contributing to the S&P 500’s early gains on Thursday, lifted by higher oil prices and strong performances by Exxon and Chevron. The news is also boosting the Energy Select Sector Fund ETF (XLE).

Crude Oil Rebounds from 2022 Low

Oil prices are rebounding after four sessions of decline, bolstered by hopes that easing anti-COVID measures in China will revive demand and by signs that some tankers carrying Russian oil have been delayed after a G7 price came into effect, Reuters reported.

China on Wednesday announced the most sweeping changes to its resolute anti-COVID regime since the pandemic began, while at least 20 oil tankers faced delays in crossing to the Mediterranean from Russia’s Black Sea ports.

Concerns of economic slowdown, weakening fuel demand and the prospect of more interest rate hikes in the United States weighed on the market for nearly a week.

Exxon Plans to Raise Spending in 2023 closer to $25 Billion

The broad-based S&P 500 Index was also lifted after Exxon Mobil Corp said it will increase spending next year to $23 billion – $25 billion, the top end of its guidance, and expand investments to curb carbon emissions.

Exxon led record profits among oil majors in the second and third quarters this year, aided by its highly criticized decision during the COVID-19 pandemic to double down on fossil fuels as European competitors shifted to renewables, Reuters said.

The strategy boosted its shares by more than 60% this year – far ahead of rivals Shell PLC and BP PLC – as oil prices rose to their highest levels since 2008 after Russia’s invasion of Ukraine.

“The results we’ve seen to date demonstrate that we’re on the right course,” Chief Executive Darren Woods said in a corporate filing.

The plan, which brought no surprises, is a continuation of Exxon’s current strategy to “produce the energy and products society needs” while reducing greenhouse gas emissions from its own operations and also from other companies, Woods said.

Chevron Gains on Higher Capital Spending Budget

Shares of Chevron are also driving the broad-based S&P 500 Index and the blue chip Dow Jones Industrial Average higher on Thursday.

Chevron expects capital expenditure (capex) of $17 billion in 2023, which is at the high end of its guidance range of $15 billion to $17 billion and marks a 25% increase from the 2022 capex estimate, excluding acquisitions.

Chevron is boosting its capex amid criticism from President Joe Biden, who slammed energy giants for using their record profits to pay hefty dividends instead of increasing production and bringing down oil prices.