It was a week where oil prices fell to their lowest levels since mid-April, while natural gas futures rallied to its highest in nearly a month.

On the news front, earnings from the top global integrated oil firms remained front and center. While Chevron Corp. (CVX Quick QuoteCVX - Free Report) and TOTAL S.A. defied low crude prices to beat per-share forecasts, Exxon Mobil Corp. (XOM Quick QuoteXOM - Free Report) and Royal Dutch Shell plc disappointed.

Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures fell 5.9% to close at $41.60 per barrel, natural gas prices ended up 3.5% to $2.876 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Schlumberger, Halliburton Report Q2 Beats.)

Oil prices booked another weekly loss after the U.S. Energy Department's latest inventory release showed a surprise build in domestic crude stockpiles, while an uptick in gasoline inventories has rekindled fears about the fuel’s demand. Things further worsened with the Baker Hughes report revealing a fifth straight rise in the U.S. oil rig count – indicating resurgence in shale drilling activities. However, a weaker dollar – that made the greenback-priced crude cheap for investors holding foreign currency – provided some support.

Natural gas, on the other hand, moved north following a historically small build. The upward movement could also be attributed to predictions of strong cooling demand with forecasts of hot weather across the country over the next few days.

Recap of the Week’s Most Important Stories

1.    The world’s largest publicly traded oil company Exxon Mobil Corp. posted second-quarter earnings of 41 cents per share, widely missing the Zacks Consensus Estimate of 64 cents. The bottom line, also, deteriorated nearly 60% from the year-ago quarter amid the impact of sharply lower commodity prices and tumbling refining margins.

Production averaged 3.957 million barrels of oil-equivalent per day (MMBOE/d), down 0.6% year over year as project ramp-up was more than offset by field decline and downtime mainly resulting from the Canadian wildfires. Liquid production increased 39,000 barrels per day to 2.3 million barrels per day. Natural gas production was 9.8 billion cubic feet per day, down 366 million cubic feet per day from the prior-year period (Read more: Exxon Mobil Misses Q2 Earnings & Revenue Estimates).

2.    U.S. energy giant Chevron Corp. reported strong second-quarter earnings, buoyed by the success of its cost savings initiatives. The company reported earnings per share (excluding special items) of 49 cents, higher than the Zacks Consensus Estimate of 31 cents and the year-ago earnings of 30 cents.

Exploration costs nosedived from $1,075 million in the second quarter of 2015 to just $214 million. Chevron spent $5,523 million in capital expenditures during the quarter, a considerable decline from the $8,724 million incurred a year ago.

Chevron’s total production of crude oil and natural gas edged down 2.6% from the year-earlier level to 2,528 thousand oil-equivalent barrels per day (MBOE/d). The U.S. output decreased 6.6% year over year to 682 MBOE/d, while the company’s international operations (accounting for 73% of the total) fell 1.1% to 1,846 MBOE/d. Moreover, decline on the production front were accompanied by the sharp downfall in oil and gas prices, the net effect resulting in a huge loss for the upstream division – to the tune of $2,462 million. (Read more: Chevron Overcomes Low Oil Prices to Q2 Earnings Beat).

3.    Europe’s largest oil company Royal Dutch Shell plc reported dismal second-quarter results amid continued weakness in commodity prices, depressed refining margins and costly integration of the BG acquisition. The sole bright spot for the company was higher production – due largely to the BG assets.

Upstream segment recorded a loss of $1,325 million (excluding items) during the quarter, significantly wider than the $469 million (adjusted) loss in the year-ago period. In the Downstream segment, the Anglo-Dutch super-major reported adjusted income of $1,816 million, 39% less than the $2,961 million earned in the year-ago period.

Shell’s upstream volumes averaged 2,628 thousand oil-equivalent barrels per day (MBOE/d), 24% higher than the year-ago period. While crude oil production increased 24%, natural gas output was up 23%, thanks to the contribution from BG Group that was acquired earlier in the year. (Read more: Royal Dutch Shell's Q2 Earnings Hit by Low Oil Price).

4.    French integrated oil and gas company TOTAL S.A. reported second-quarter 2016 operating earnings of 90 cents per share (€0.79 per share), easily surpassing the Zacks Consensus Estimate of 75 cents by 20%.

The company’s strict cost discipline and addition of low-cost assets have brought down the breakeven point. In addition, the recovery in oil prices in the second quarter boosted its earnings.

Total hydrocarbon production during the second quarter of 2016 averaged 2,424 thousand barrels of oil equivalent per day, up 5% year over year. The increase was primarily driven by new project startups, partially offset by the security situation in Nigeria and forest fires in Canada.

TOTAL’s production is expected to increase 4% in 2016, after reaching 4.5% growth in the first half. The startup of Upstream projects – Incahuasi in Bolivia and Kashagan in Kazakhstan – in the second half will drive production. TOTAL continues to work on cost management initiatives and targets to invest in the range of $18–$19 billion in 2016. (Read more: TOTAL Beats Q2 Earnings & Revenues on Oil Recovery).

5.    Houston-based energy major ConocoPhillips (COP Quick QuoteCOP - Free Report) reported wider-than-expected second quarter loss amid a production dip and low oil prices. Daily production from continuing operations averaged 1.546 million barrels of oil equivalent (MMBOE) in the quarter, down from 1.595 MMBOE in the year-ago quarter. Average realized price for oil was $42.72 per barrel, compared with $58.00 in the year-earlier quarter.

For 2016, ConocoPhillips has further reduced its capital expenditure guidance to $5.5 billion from $5.7 billion. The decrease is mainly attributable to efficiency improvements across the portfolio.

The world's largest independent exploration and production company raised its full-year production guidance to 1,540 to 1,570 MBOED – about 2% above prior guidance – reflecting strong year-to-date performance across most of the portfolio. For the third quarter, production from continuing operations is expected at 1.510–1.550 MMBOE. (Read more: ConocoPhillips Posts Wider-than-Expected Loss in Q2).

Price Performance

The following table shows the price movement of the major oil and gas players over the past week and during the last 6 months.

Over the course of last week, ‘The Energy Select Sector SPDR’ was down 2.97% on renewed concerns over a global supply glut. Consequently, investors witnessed selling in most market heavyweights. The worst performer was offshore drilling giant Transocean Ltd. (RIG Quick QuoteRIG - Free Report) whose stock price fell 7.48%.

But longer-term, over the last 6 months, the sector tracker has jumped 17.77%. U.S. energy biggie Chevron Corp. was the main beneficiary during this period, experiencing a 22% price increase.

What’s Next in the Energy World?

As usual, market participants will be closely tracking the regular weekly releases i.e. the U.S. government data on oil and natural gas. Energy traders will also be focusing on the Baker Hughes data on rig count. However, the 2016 Q2 earnings remain the primary focus this week again, with a handful of S&P 500 members coming out with quarterly results.

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