Key Takeaways IMO reports Jan. 30 before the open, with a 1.79% Earnings ESP and four straight earnings beats.XOM is expected to post $1.64 EPS on Jan. 30, down 1.8% year over year, yet carries a 2.29% Earnings ESP.PTEN reports Feb. 4 after the close, sporting a 19.15% Earnings ESP despite a mixed recent beat record.The fourth-quarter 2025 earnings season is now underway and investors are closely monitoring the oil and energy sector, which continues to navigate macroeconomic uncertainty and significant vola ...

The U.S. upstream oil and gas sector continues to operate in a complex macro environment, marked by easing crude prices, resilient natural gas demand and heightened capital discipline. While global oil inventories are forecast to rise into 2026, creating downward pressure on crude prices, natural gas fundamentals are comparatively constructive, supported by winter demand and structural growth from LNG exports and power generation. Against this backdrop, operators with low breakeven assets, strong balance sh ...

Core Insights - The oil/energy sector is facing challenges in Q1 2025 due to fluctuating commodity prices, with oil prices declining and natural gas prices increasing, leading to a mixed outlook for the sector [1][2][3] Oil Price Performance - West Texas Intermediate crude's average price fell to $71.84 per barrel, down from $77.56 the previous year, influenced by sluggish global economic growth, rising oil production from non-OPEC+ countries, potential output increases by OPEC+, and weaker demand [2] - Additional downward pressure on oil prices is attributed to growing trade tensions and an increase in oil inventories [2] Natural Gas Price Performance - The Henry Hub spot price for natural gas averaged $4.15 per million British thermal units (MMBtu), nearly doubling from $2.13 MMBtu in the same quarter last year, driven by unusually cold weather and increased heating demand [3] - The rise in liquefied natural gas (LNG) exports has also contributed to tighter supply and elevated prices [3] Sector Earnings Trends - Sector earnings are projected to decline by 13.6% year over year, while revenues have increased by only 0.7%, insufficient to offset the decline in profitability [4] - The decline in earnings is primarily due to weaker oil prices compressing margins across the sector [4] Comparative Sector Performance - The oil/energy sector is underperforming compared to other sectors, such as Technology and Medical, which are experiencing strong earnings growth [5] - Excluding the oil/energy sector, the S&P 500's overall earnings growth improves to 4.4%, highlighting the negative impact of the oil/energy sector on aggregate results [6] Company Earnings Focus - Companies in the oil/energy sector are preparing for their Q1 earnings reports, with a focus on achieving a positive Earnings ESP and a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) to increase the odds of an earnings beat [7] Company-Specific Insights - **Cheniere Energy, Inc. (LNG)**: Expected earnings of $2.81 per share, a 31.92% increase year-over-year, with a history of beating estimates [11] - **Canadian Natural Resources Limited (CNQ)**: Expected earnings of 73 cents per share, a 43.14% increase year-over-year, with mixed performance in beating estimates [13] - **Cenovus Energy Inc. (CVE)**: Expected earnings of 29 cents per share, a 36.96% decrease year-over-year, with a history of missing estimates [15] - **Berry Corporation (BRY)**: Expected earnings of 10 cents per share, a 28.57% decrease year-over-year, with limited success in beating estimates [17]

Core Insights - The oil/energy sector is experiencing significant challenges in Q1 2025 due to fluctuating commodity prices and market uncertainties, with oil prices declining and natural gas prices increasing, creating a mixed environment for companies in this sector [1] Oil Price Performance - In Q1 2025, the average price of West Texas Intermediate crude fell to $71.84 per barrel, down from $77.56 in the previous year, driven by concerns over weaker global economic growth, increased supply from non-OPEC+ nations, and lower-than-expected demand [2] - Escalating trade tensions and rising oil inventories further pressured oil prices [2] Natural Gas Price Trends - Natural gas prices increased significantly, with the Henry Hub spot price averaging $4.15 per million British thermal units (MMBtu), up from $2.13 per MMBtu in the prior-year quarter, primarily due to colder weather boosting heating demand and rising LNG exports [3] Earnings Outlook for Oil/Energy Sector - Oil/energy companies in the S&P 500 are projected to report an 11.1% year-over-year earnings decline for Q1 2025, continuing a downward trend from the previous quarter [4] - In contrast, the broader S&P 500 is expected to see a 6.8% earnings increase, highlighting the underperformance of the oil/energy sector [5] Revenue Trends - Revenue for oil/energy companies is projected to decline by 0.4% year-over-year, while S&P 500 revenues are on track to grow by 3.9%, indicating struggles in maintaining top-line growth in a changing commodity environment [6] Margin Compression - The earnings drag from lower oil prices continues to dominate despite higher natural gas prices, compressing margins and making it difficult for companies to deliver consistent results [7][9] Sector Performance Comparison - Other sectors, such as Technology (+12.5%), Medical (+34.7%), and Utilities (+14.1%), are experiencing strong earnings growth, while the oil/energy sector remains the worst performer alongside other weak sectors like autos and basic materials [8] Company-Specific Earnings Insights - TechnipFMC plc (FTI) has an Earnings ESP of -0.92% and a Zacks Rank 3, indicating low chances of an earnings beat, with a consensus estimate of 36 cents per share, suggesting a 63.64% increase from the prior year [11][13] - Valero Energy Corporation (VLO) has an Earnings ESP of -14.71% and a Zacks Rank 3, with a consensus estimate of 43 cents per share, indicating an 88.74% decrease from the prior year [13] - RPC, Inc. (RES) has an Earnings ESP of 0.00% and a Zacks Rank 3, with a consensus estimate of 7 cents per share, suggesting a 46.15% decrease from the prior year [14][15] - CNX Resources Corporation (CNX) has an Earnings ESP of -2.96% and a Zacks Rank 3, with a consensus estimate of 65 cents per share, indicating a 44.44% increase from the prior year [16][17]