Oil-and-gas giants Exxon Mobil (XOM) and Chevron (CVX) surpassed subdued third-quarter earning🌜s expectations Friday. But substantiallyꦬ weaker profit margins for refined products, reflecting lower summer fuel prices, dropped overall net income for both companies from a year ago.

Exxon reported net income of $8.6 billion, or $1.92 per share. That beat the consensus projection as tracked by Visible Alpha. But profits fell 5% from the same period a year ago and 7% from this year's second quarter. Year-to-year profits at Exxon have declined in five of the past six quarters.

Chevron suffered a steeper earnings hit from a year ago. The company reported net income of $4.5 billion, or $2.48 per share. Profits fell 31% from the same period a year ago, though they increased marginally from this year's second quarter.

Chevron's shares were 3% higher in afternoon trading, while Exxon's were off nearly 1%.

Fuel Price Impact

Exxon said its "significantly weaker industry refining margins" declined from historically high levels as "supply from industry capacity additions outpaced record global demand."

Indeed, average U.S. prices for all gasoline grades fell to $3.48 per gallon during the quarter, down 10% from $3.87 in last year's third quarter. Average diesel prices dropped to $3.69 per gallon from $4.48, down 18%.

U.S. fuel prices peaked late this winter and early this spring, a seasonal anomaly that helped consumers and the Federal Reserve's fight against inflation. But for energy producers, falling prices of oil, natural gas, and fuel have reduced the historically strong profits they enjoyed in late 2022 and much of 2023.