By Ernest Scheyder

HOUSTON (Reuters) - Rising crude prices helped Chevron Corp and Exxon Mobil Corp easily beat analysts' quarterly profit expectations on Friday, setting an upbeat tone as the two companies press ahead with shale oil expansions.

While cost cuts and asset sales provided a boost to both companies, the results highlighted the slowly improving dynamics for the energy industry as oil prices have climbed more than 50 percent since early 2016.

First-quarter results were especially robust at Exxon, with quarterly profit more than doubling to $4.01 billion, even as production fell 4 percent.

Chevron swung to a $2.68 billion quarterly profit and turned cash flow positive, earning more than it spent, a milestone Wall Street analysts had long sought. Cash flow should continue to rise further, Chief Financial Officer Pat Yarrington told investors on a Friday conference call.

Chevron's results were helped by $2.1 billion in asset sales. The company has sold more than $5 billion in assets since last year and is seeking buyers for its Canadian oil sands business, sources have told Reuters.

If Chevron sells the business, "we'd want to make sure we got full value for it," Yarrington said.

Shares of both Exxon and Chevron rose less than 1 percent in afternoon trading as U.S. oil prices traded flat near $49 per barrel.

Their energy peers, BP Plc and Royal Dutch Shell Plc, are set to report quarterly results next week.

Looming over the large international oil companies, though, is uncertainty over whether the Organization of the Petroleum Exporting Countries will extend a production cut past June when it meets next month in Vienna. Should the cut not be continued, oil prices would likely drop, pushing the sector back into recession.

'NEED TO BE CAUTIOUS'

Jeff Woodbury, Exxon's head of investor relations, said while the company believes underlying global oil demand remains strong, high inventories and new supplies coming into the market "indicates a need to be cautious."

Chevron and Exxon expanded production in their American shale portfolios during the quarter, with both deciding the low-cost fields offered an easy opportunity to boost profit. They have laid out plans to increase drilling in those fields this year.

Chevron, the second largest leaseholder in the Permian Basin, which is the largest American oilfield, has devoted much of its 2017 capital budget to shale projects. Chief Executive Officer John Watson told Reuters earlier this month the Permian was vital to Chevron's growth.

Exxon doubled its acreage holdings in the Permian Basin of West Texas earlier this year in a deal worth up to $6.6 billion. It was the U.S. oil industry's largest deal in the first quarter, and Exxon said it plans to drill its first well on the acreage soon.