After a string of losses, ExxonMobil and Chevron on Friday both reported a return to profitability in the first quarter, bolstered by a significant jump in oil prices.

The results, which come amid a similar round of profits by Royal Dutch Shell, Total and other European petroleum giants, point to a much-improved demand outlook compared with last year, when oil prices tumbled midway through the first quarter as the coronavirus crisis shuttered large parts of the economy.

"Earnings strengthened primarily due to higher oil prices as the economy recovers," said Chevron Chief Executive Mike Wirth.

Yet larger petroleum companies still face major challenges, including campaigns from activist shareholders at annual meetings next month over their response to climate change.

Both US oil firms also face weakness in their downstream business amid tepid demand for petroleum products, especially jet fuel.

ExxonMobil, which reported losses in all four quarters in 2020, reported profits of $2.7 billion in the first quarter. Revenues rose 5.3 percent to $59.1 billion.

The company said its average price for crude oil sold rose 42 percent compared with the fourth quarter, while natural gas prices rose by 33 percent.

Conditions in the downstream business improved from the fourth quarter, "but remained below 10-year lows driven by market oversupply and high product inventory levels," ExxonMobil said.

But the company saw heady conditions in its chemical business, where profits surged due to "continued strong demand, global shipping constraints and ongoing supply disruptions, particularly in North America."

At Chevron, which reported losses the last three quarter, earnings came in at $1.4 billion, down 61.7 percent from the year-ago period, due in part to a steep drop in downstream profits.

Revenues rose 1.7 percent to $32 billion.

Chevron also benefited from higher oil prices compared with the 2020 period, although international natural gas prices fell in the most recent quarter compared with the year-ago period.

ExxonMobil reported profits in the first quarter after a string of losses in 2020
ExxonMobil reported profits in the first quarter after a string of losses in 2020 GETTY IMAGES NORTH AMERICA / Michael loccisano

With companies like Total and BP undertaking renewable energy investment and committing to net-zero emissions targets, the US oil giants are under increased pressure to address climate change.

ExxonMobil said it made progress on its "energy transition strategy," which would see it develop large-scale projects for carbon capture and storage (CCS).

ExxonMobil Chief Executive Darren Woods rejected using solar and wind investment as a "litmus test" for a company's commitment to climate change, saying on an analyst conference call that the oil giant is "at the early stages of a new business" with CCS.

However, for the business to take off, there will be need to be government policies to incentivize carbon reductions as well as new frameworks for storing carbon dioxide and installing pipelines and facilities, Woods said.

At its annual meeting next month, the oil giant faces a challenge from activist investor group Engine No. 1, which has nominated competing directors to more forcefully shift the company's response to climate change.

In a presentation earlier this week, Engine No. 1 dismissed CCS and ExxonMobil's other climate-related efforts as ideals that "have mostly generated advertising."

"ExxonMobil paints an unrealistic picture of the likelihood that carbon capture will obviate the need for change," the group said.

Chevron also faces a number of climate-related proposals at its annual meeting in May, including a vote directing the company to analyze how its business would cope if an International Energy Agency scenario of "net zero" emissions by 2050 is realized.

Chevron is urging shareholders to reject the proposal in the wake of ongoing company efforts towards the energy transition, arguing the report is "unnecessary."

Shares of ExxonMobil fell 2.9 percent to $57.24, while Chevron dropped 3.6 percent to $103.07. However, both companies are up by more than 23 percent so far in 2021.