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Chevron (NYSE:CVX) reported earnings this morning well below analyst expectations. The oil and gas sector as a whole is down as oil prices fell nearly 2%. The drop is due to stockpiles that continue to rise, as well as a strengthening dollar. As of 1:30 p.m. EDT the S&P 500 (SNPINDEX:^GSPC) is down two points to 1,754 and the largest exchange-traded fund tracking the S&P 500, the SPDR S&P 500 (NYSEMKT:SPY), is down 0.1%.

Yesterday, ExxonMobil (NYSE:XOM) reported earnings that beat analyst estimates on both earnings and production. Exxon's results were weighed down by the company's refining division where profits dropped 80% year over year. Chevron today is down 2.2% after reporting worse-than-expected earnings with similar problems as Exxon in the refining division.

Chevron warned analysts on Oct. 9 that this quarter's result would be weighed upon by "significantly lower" earnings in its refining business. Analysts didn't decrease their expectations enough as Chevron still surprised them with its earnings. Chevron reported earnings per share of $2.57, down 4% from the year-ago period and worse than analyst expectations of $2.71. Revenue rose 0.8% to $58 billion, less than analyst expectations of $59 billion. Production was up 2.7% year over year to 2.5 million barrels of oil equivalent per day.

The refining industry as a whole has been struggling with an oversupply of capacity. This weighs on the prices refiners can charge and has been seen in all the majors' results. Chevron's refining operations reported earnings of $380 million, 45% lower than a year ago.

Oil prices
Oil prices are down today, with West Texas Intermediate crude down 1.3% to $95.14 and Brent crude down 1.8% to $106.91. Oil prices continue to slide, especially in the U.S. as oil stockpiles continued their rise for a sixth week in a row. On Wednesday, the Energy Information Administration reported that crude oil stocks, excluding the strategic petroleum reserve, rose by 4.1 million barrels to 383.9 million. That's just 14 million barrels below the all-time high recorded in May of this year.

The large and growing stockpile is weighing on U.S. oil prices, which continue to diverge from Brent crude. The Brent-WTI spread has now widened to nearly $12 a barrel due to the supply situation disparity.

WTI Crude Oil Spot Price Chart

WTI Crude Oil Spot Price data by YCharts