Oil prices rebound following Wednesday sell-off, energy sector M&A activity

Yahoo Finance markets reporter Ines Ferre joins the Live Show to discuss rising crude oil prices after a decline, what the spike may signify surrounding a looming recession, and the upcoming earnings report for ExxonMobil and Chevron.

Video transcript

- It's been a wild ride for the oil market. Crude recovering, stabilizing today after a sharp sell off Wednesday. Yahoo Finance's Ines Ferre is here with more. Ines.

INES FERRE: Yeah, that's right. Oil today rebounding slightly. It was down more than 3% yesterday. Look, the concerns around oil has been concerns about a recession, concerns about if the banking situation gets worse. So that's why we saw some fluctuation.

Despite that production cut, that OPEC plus had announced earlier in April, you saw oil spike then when that announcement was made. And it has since come down since then. But we are going to get earnings from Chevron, from ExxonMobil tomorrow. And analysts are forecasting that for 2023, both Chevron and ExxonMobil, their profits will be coming down from the highs of 2022.

Remember that last year, you had the invasion of Ukraine. You had oil going up to 130. And so you had these big oil companies that were making record profits for the year. What's been interesting is just listening to some commentary. For example, Valero Energy commentary from their earnings call. Valero saying that wholesale diesel sales, those were up 25% year over year. Also, gasoline sales up 16%.

And CEO Gary Simmons saying that Valero doesn't see diesel weakness with strong agricultural demand. So some interesting commentary there. And we'll be watching the commentary from ExxonMobil and Chevron.

- All right. Well, Ines, ExxonMobil, let's talk about some of the reports that we have heard about this company over the last month or so. They did make some waves following the report, that it did hold talks-- takeover talks, excuse me-- with Pioneer Resources. Now there is a new report signaling that we could see more deals within the energy sector. What are we potentially looking at?

INES FERRE: Yeah, that's. Right this is a report from KPMG that basically is looking at quarter by quarter since 2021 M&A activity. And just to give you some perspective, comparing the first quarter of 2021 to the first quarter of 2023, you saw M&A in 2021 at $24 billion in that first quarter, compared to $15 billion of M&A activity in the first quarter of this year.

And part of this has to do with decarbonization efforts. So you have these oil and gas companies that are looking for targets that are going to improve their environmental profile. However, now you've got energy companies that are sitting on a lot of cash. And that they want some drilling-- they would like drilling sites for the future.

And so the report is basically saying that you could see more M&A activity going forward, especially because some of these companies are sitting on so much cash. You had The Wall Street Journal that recently talked about ExxonMobil eyeing the acquisition of Pioneer Natural Resources, Seana, and ExxonMobil, as I just mentioned, had record profits last year.