Produced by Filip Fortuna. Filmed by Rod Fitzgerald.
In the push me pull you debate about where the oil price might head next, consider this. The average Brent oil price for this January to March quarter rose year on year for the first time since 2012. So if you thought the disaster for crude producers came only a couple of years ago, think again.
So finally, a bit of cheer then for international oil majors. Their earnings reporting season kicks off tomorrow with numbers from Total of France, followed by ExxonMobil and Chevron the next day.
Analysts' estimates point to a doubling or more of quarterly earnings-- the best gain this decade. Now while better commodity prices certainly helps, part of this profit jump comes from some easy comparatives. Indeed, the worst drop in quarterly earnings for this group in recent years came at the beginning of 2016.
Earnings are at least moving the right way again. Expect the biggest percentage leaps from BP, Exxon, and Royal Dutch Shell, as their oil and gas production divisions move from losses strongly into profits. Their upstream earnings should jump by half over the final period of 2016, thinks brokers Macquarie.
So if markets do like a bit of earnings momentum though, you wouldn't know it looking at these share price charts of these oil producers. As a group, the integrated oil companies have not benefitted either from the bounce in oil prices nor even from the healthy pricing for refined oil products like petrol. Their sector indexes trailed world markets this year and last.
Exxon in particular has fallen well behind its peers this year. On the other hand, shares of Spain's Repsol, which will probably report a decrease in quarterly earnings, they're flying. And it is not just about high versus low beta shares. Oil services, the growthy the end of energy stocks, have also done pretty bad this year.
It's just possible that some very positive earnings surprises from the oil majors could spark a short term rally in the sector. Coupled with an oil price surge, that might bring the punters back to this sector perhaps. Contrarian investors will no doubt take note of these proceedings. Most others, they'll wait for a clear sign that this earnings recovery can last.