BP has become the latest energy company to benefit from the recent rebound in oil prices, tripling its first quarter profits year-on-year.
The UK oil firm yesterday reported clean earnings of $1.51bn (£1.2bn) in the first quarter of 2017 compared with $532m a year before. This exceeded analysts' average forecast of $1.26bn.
Brent crude prices, a major driver for BP’s earnings, averaged around $54 per barrel in the first quarter of this year compared with just under $34 a barrel in the same period last year.
The oil major, whose share price rose closed the day 1.6 per cent up at 449.6p, is also benefiting from higher output and cost cutting. Chief executive Bob Dudley called the results “robust”.
ConocoPhillips, the giant US exploration and production company, also reported an uplift in profits for the first quarter yesterday on the surging oil and gas prices.
The US firm reported an adjusted loss per share of 2 cents for the three months to March, sharply down from the 95 cent loss it reported for the first quarter of 2016 but narrowly missing analyst expectations. Revenues were slightly better than expected at $7.52bn, up 47 per cent from the equivalent period of 2016.
This Thursday, Shell is due to report for the quarter with analysts forecasting profits of just over $3bn, reversing a loss at the start of last year.
Brewin Dolphin’s Iain Armstrong said most companies in the sector could look forward to good year-on-year comparisons, considering the depths oil prices had plunged to during the same quarter last year.
Last week, ExxonMobil and Chevron, the two largest US oil groups, reported big improvements in first quarter earnings thanks in part to the oil price bounce.
Oil prices could climb further in coming months on strong demand, analysts and industry bodies believe.
The closely-watched US Energy Information Administration forecasts Brent prices to average $54 per barrel in 2017 and $57 per barrel in 2018.
Barclays sees oil hitting $62 at end of the second quarter before falling later this year, with Opec cited as one risk factor.
Goldman Sachs analysts said earlier this year that it was sticking to its view that tightening supplies will lead to higher prices later this year.
“Our core view remains that healthy seasonal product demand in the US will draw down bloated inventories, buoying benchmark prices,” said oil and gas specialists at BMI Research.