markets

Matt Phillips1/8/25

Exxon’s and Shell’s pain is consumers’ gain

Oil giants Exxon and Shell said their upcoming quarterly profits would take a hit, sending their shares lower in early trading.

Exxon said Q4 earnings will seriously undershoot Wall Street estimates because of low crude oil and gasoline prices. China’s slide into a possible depression is partly why, as trouble in the world’s largest crude importer cut global energy demand.

Meanwhile, Shell on Wednesday morning said profit in its core integrated gas unit would slide significantly because of expiring hedging contracts. It said it would book a charge of $1.5 billion to $3 billion.

Shares of Shell, which reports earnings January 30, fell about 3%. Exxon, whose earnings are due January 31, fell 1.5%.

While rough for Exxon and Shell, the drop in gasoline prices has been a boon for Americans. Average unleaded gas prices in the US have slid lately, hitting their lowest point of 2024 in last month. They were recently at $3.07 a gallon, well off their 2024 peak of $3.68, AAA data shows.

Exxon signals weaker performance across the board to hurt Q4 profits

Exxon signals weaker performance across the board to hurt Q4 profits

Meanwhile, Shell on Wednesday morning said profit in its core integrated gas unit would slide significantly because of expiring hedging contracts. It said it would book a charge of $1.5 billion to $3 billion.

Shares of Shell, which reports earnings January 30, fell about 3%. Exxon, whose earnings are due January 31, fell 1.5%.

While rough for Exxon and Shell, the drop in gasoline prices has been a boon for Americans. Average unleaded gas prices in the US have slid lately, hitting their lowest point of 2024 in last month. They were recently at $3.07 a gallon, well off their 2024 peak of $3.68, AAA data shows.

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Matt Phillips4h

Constellation, Talen, and NRG surge as BNP analysts see “golden (AI)ge” ahead for them

Power producers Talen Energy, Constellation Energy, and NRG jumped Wednesday, benefiting in part from a rosy write-up by analysts at BNP Paribas, who launched coverage of all three at “outperform” and argued that the AI energy trade — a big AI-related winner in recent years that has lagged a bit recently — is due for a second wind.

That view was in a broad note on the independent power producer segment of utilities industry that the analysts published Wednesday, titled “The Golden (AI)ge of IPPs.”

Here’s the gist of it:

US independent power producers (IPPs) have lagged the AI basket for 6+ months, after garnering much attention in 2023-1H25. Investors are caught up in the minutia of perceived headwinds: underwhelming pace of power purchase agreement deals, distributed behind-the-meter solutions stealing the ‘time-to-power’ edge, pressure for data centers to bring generation and not tighten the grid, etc.

And yet, as we demonstrate, despite all this noise, the wave of rising load is at the cusp of an acceleration that will nonetheless overwhelm new supply—well into the 2030s, in our view. Hop on or risk missing the resurgent AI trade this decade.

BNP’s price targets for the stocks — Constellation ($407), NRG ($232) and Talen ($549) — implied gains of 32%, 50%, and 68% respectively. (Though today’s gains would reduce those potential upside targets somewhat for new buyers.)

US independent power producers (IPPs) have lagged the AI basket for 6+ months, after garnering much attention in 2023-1H25. Investors are caught up in the minutia of perceived headwinds: underwhelming pace of power purchase agreement deals, distributed behind-the-meter solutions stealing the ‘time-to-power’ edge, pressure for data centers to bring generation and not tighten the grid, etc.

And yet, as we demonstrate, despite all this noise, the wave of rising load is at the cusp of an acceleration that will nonetheless overwhelm new supply—well into the 2030s, in our view. Hop on or risk missing the resurgent AI trade this decade.

BNP’s price targets for the stocks — Constellation ($407), NRG ($232) and Talen ($549) — implied gains of 32%, 50%, and 68% respectively. (Though today’s gains would reduce those potential upside targets somewhat for new buyers.)

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