Exxon profits still rising

Almost $10bn in profits may not please consumers

ExxonMobil, the world's largest oil company, has reported a 6% rise in second quarter profits.

The company earned $4.38bn, bringing its half year profit total to a record $9.43bn.

The company, which sells under the brand name Esso in many countries, has continued to enjoy increased revenue from the strength of crude oil prices and has particularly benefited from higher natural gas prices during the second quarter.

The success of the major oil firms depends heavily on the price of their raw materials in the international market place, rather than on the strength of the global economy.

And, while an economic downturn is expected to have a direct impact on energy demand, it has done little to dent Exxon's results so far.

But with both gas and crude oil prices now drifting lower, analysts believed that the recent run of record-breaking results for oil firms could come to an abrupt end.

Worrying outlook?

Crude oil prices, while down from a year ago, are still strong by historic standards, averaging about $28 a barrel during the last quarter.

The first half of 2001 is clearly the peak of the oil industry earnings cycle

Oil industry analyst

The strength of prices for raw materials helped Exxon's exploration and production unit to post $2.85bn in revenue, $85m higher than the same period the previous year.

But analysts have expressed concern about the outlook for the rest of the year.

"The first half of 2001 is clearly the peak of the oil industry earnings cycle for the foreseeable future," said Michael Young, an analyst at Gerard Klauer Mattison.

A weakening oil price has already spurred speculation that the Opec cartel will take emergency action to try and stop further falls.

Chemical downturn

The one sector already feeling the pressure because of the slowdown is Exxon's chemical unit.

Profits at the chemical business shrunk to $142m from $362m the previous year.

Including special charges springing from the merger between Exxon and Mobil in 1999, total profits at the firm slipped 1.5%.

Fears about slipping crude oil prices caused Exxon's share price to fall 1.62% to $41.81 after the first hour of trading in New York.