What happened
Shares of ConocoPhillips (COP +0.87%) had fallen more than 5% by 10:45 a.m. EDT on Wednesday. Weighing on the oil stock were plunging crude oil prices and earnings at its acquisition target Concho Resources (CXO +0.00%), whose stock also fell by more than 5% in early morning trading.
So what
On Wednesday, oil prices sold off, with the U.S. oil benchmark WTI sinking almost 5% to less than $38 per barrel. Weighing on crude prices were a higher-than-expected rise in oil inventory levels and surging coronavirus cases across the U.S. and Europe. With the pandemic worsening, governments are contemplating new lockdown orders, which would hit demand. That combination of rising supplies and the potential for weaker demand weighed on most oil stocks, including ConocoPhillips and Concho Resources.
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Meanwhile, Concho reported its third-quarter results last night, which affected its stock price. The oil producer recorded $1.43 per share of adjusted earnings, which beat the analysts' consensus estimate by $0.20 per share thanks to a 27% year-over-year decrease in controllable costs. But it only realized $39.23 per barrel of oil during the period, while its production declined year over year.
Now what
ConocoPhillips is next on deck to report its third-quarter results, which it expects to release tomorrow morning. That report will likely show lower production due to weaker oil prices, which the company should have partly offset by cutting costs. Meanwhile, the oil producer hopes that its pending combination with Concho will further drive down costs so that it can better weather the continued volatility in the oil market.
