Exxon Mobile Corporation (NYSE: XOM) may have reported near-record earnings yet again, but huge numbers aren't good enough when expectations are high. The oil giant reported near-record profits of $10.89 billion on revenues of $116.8 billion, but shares dropped more than four percent before recovering slightly on the day. Many investors remain bullish on the energy markets, but this short-term blip has certainly sent a shockwave.

The big problem was with crude inventories that came in much higher than expected. This is bad news for oil producers like Exxon Mobile since a higher supplier typically means a lower price assuming that demand remains consistent. Meanwhile, a Nigerian strike that has kept oil prices at a high is coming closer to a resolution. This should help boost Exxon's oil output, but will likely lead to even higher crude supply.

The dollar also rallied today after bullish comments emerged from the Federal Reserve meeting that took place yesterday. Since oil is a dollar-priced commodity, the move had an adverse affect on crude prices. After all, an increase in purchasing power for the dollar means that more oil can be bought for the same dollar price. This means that the price of oil must drop in order to remain in equilibrium with the dollar's value.

In the end, these three factors combined with supply problems for Exxon Mobile led to a decline not only in this oil giant but also many other players in the sector. While this may only be a short-term blip, investors should be wary of an improving dollar and supply issues going forward. After all, the sharp rise in oil prices is only due to a small number of factors that could quickly change and slow down the dramatic growth!

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