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As I noted in the earnings preview earlier this week, Exxon Mobil Corp. (NYSE: XOM) was going to be under pressure from narrowing margins, and that is exactly what happened, pushing its third quarter profit down by 10%.

Analysts had expected to see the world's largest oil company to show earnings of $1.75 per share for the quarter, but with the tighter margins, Exxon's earnings were only able to come in at $1.70 per share. Net income was $9.41 billion. This is down from $10.49 billion, or $1.77 per share during the third quarter last year.

Rising oil prices are typically considered to be a blessing for big oil companies, but the opposite side of the equation is that they result in tighter refining margins, and that is exactly what happened to Exxon Mobil this time around. Also adding to the company's decline were gasoline prices, which fell by around 6% during the quarter.

This is only the first time since 2002 that the company has posted two consecutive quarters of profit declines. In the premarket, early morning traders are pushing the stock down 1.6% in reaction to today's earnings news.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer. DISCLOSURE: Mr. Fowlkes owns and/or controls diversified portfolios of long and short stock and option positions that include holdings in XOM.

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