Overview of What’s News: PM Edition — Chaos in Energy Markets Boosts Big Oil Earnings
This episode covers a wide-ranging market and business news roundup led by a strong quarter for major U.S. oil companies, driven by volatility in energy markets and unusually high refining margins. It also touches on legal challenges facing prediction markets, OpenAI’s scale-up, Apple and Amazon’s diverging earnings reactions, a California political/legal fight over a major media merger, and the ripple effects of a cyclospora outbreak on lettuce demand.
Energy Markets and Big Oil Earnings
ExxonMobil and Chevron post blockbuster results
- ExxonMobil reported $14.5 billion in quarterly earnings, more than double a year earlier and its highest since 2022.
- Chevron reported $12.1 billion, a record quarterly profit.
- The gains were helped by the volatility in global energy markets following the Iran war-related disruption.
Why profits were so strong
- Exxon’s production growth was concentrated in the Permian Basin in Texas, especially after its acquisition of Pioneer Natural Resources.
- The bigger boost came not just from crude prices, but from refining margins:
- The crisis shifted from crude to fuels.
- Tight supply in jet fuel, diesel, and gasoline pushed margins to record levels.
- China and Russia reduced fuel exports, adding to the shortage.
- Even with higher output, the companies are still seeing strong profitability because the market for refined fuels remains especially tight.
Venezuela remains difficult for Chevron
- Chevron has increased production in Venezuela by about 15% over six months, to roughly 280,000 barrels per day.
- But broader expansion there remains limited because of:
- high taxes and royalties
- tough regulation
- concerns about whether the business case is strong enough for shareholders
- Chevron says it is still negotiating improved fiscal terms with the Venezuelan government.
BP may exit its UK North Sea business
- BP is putting its UK North Sea business up for sale.
- The move reflects BP’s strategy to focus on higher-return projects.
- If completed, it would mark the end of BP’s oil and gas production in the UK after more than 50 years.
Markets and Tech
Tech stocks rally to end the month
- U.S. stocks rallied into month-end, with the Nasdaq leading gains.
- A relief rally followed news that the hedge fund Situational Awareness had sold most of its stock holdings, easing fears of further forced selling.
Mixed reactions to earnings
- Amazon surged more than 15% after a strong earnings report, its biggest one-day gain since 2012.
- Apple fell more than 7% after disappointing guidance.
- Apple’s drop erased nearly $358 billion in market value, one of the biggest one-day declines ever for a U.S. company.
Monthly performance
- The Nasdaq fell 3.2% in July, its worst monthly drop since March.
- The Dow ended slightly higher for the month.
- The S&P 500 finished modestly lower.
AI and Prediction Markets
OpenAI says it has crossed major usage milestones
- OpenAI said it now has:
- more than 1 billion active users
- 2 million businesses using its AI models
- The company has been cutting prices on some models to attract more users and compete with Anthropic.
New York sues Kalshi over prediction markets
- New York’s attorney general filed a lawsuit against Kalshi, alleging it operates an illegal gambling business.
- The state wants Kalshi banned in New York.
- If successful, the case could expose the company to as much as $36 billion in penalties and repayments.
- Kalshi argues prediction markets should be regulated federally, not by states.
Media and Politics
Gavin Newsom worries about the Paramount-Warner Bros. merger lawsuit
- WSJ reports that California Gov. Gavin Newsom has concerns about the state’s lawsuit seeking to block the Paramount–Warner Bros. Discovery deal.
- Newsom is reportedly worried the merger challenge could hurt Hollywood jobs.
- His office has urged Attorney General Rob Bonta to try to resolve the matter outside court.
- Newsom does not control the attorney general’s litigation decisions.
Food, Public Health, and Agriculture
Cyclospora outbreak is hitting lettuce demand
- A cyclospora outbreak has reduced consumer demand for lettuce and other fresh produce.
- Nielsen IQ data showed heads and bags of lettuce were down 8% in the four weeks through July 18 versus a year earlier.
Farmers are plowing under lettuce
- Growers, especially in California’s Salinas Valley, have seen cutbacks from:
- restaurants
- food distributors
- grocery stores
- Some farmers are choosing to plow over fields rather than harvest, because:
- lettuce has a short shelf life
- picking and storage costs can exceed the value of unsold crops
- The article emphasizes that there is no evidence domestic lettuce is contaminated by cyclospora, but consumer confusion is still hurting sales.
Farmers markets help, but not enough
- Farmers markets are seeing more interest from consumers seeking shorter supply chains.
- But they are too small to offset the decline in large-scale lettuce demand from grocery and restaurant channels.
International Update
Ceuta crossing leaves dozens dead
- Spanish officials said at least 57 people died during the mass rush into the Spanish territory of Ceuta, mostly by drowning.
- Most of the roughly 50,000 who made it across have since returned to Morocco voluntarily.
- The incident raised questions about whether it was orchestrated for political reasons, not just migration.
Key Takeaways
- Energy companies are benefiting more from refining profits than from crude prices alone.
- Tech earnings remain highly polarized, with Amazon rallying and Apple selling off sharply.
- Prediction markets, media mergers, and agricultural demand shocks are all becoming major business and policy stories.
- Consumer fear can move markets quickly, even when there is no direct safety evidence, as shown by the lettuce sales decline.
Upcoming Coverage Mentioned
- A weekly markets wrap-up is scheduled for the next episode.
- Sunday’s show will look at how investors can gain exposure to private companies like Anthropic through big tech stocks.