BP profit fall 80% on oil price crash

The average price of Brent crude, the global benchmark, slumped to the lowest in almost 12 years in the quarter

BP Chief Executive Officer Bob Dudley said he expected global oil supply and demand to balance towards the end of the year (Getty Images)

BP reported a 80 per cent decline in first-quarter earnings as crude oil prices continued to slide and a mild winter weighed on refining margins.

Profit adjusted for one-time items and inventory changes fell to $532 million from $2.6 billion a year earlier, the London-based company said in a statement Tuesday. Analysts had expected a loss of $244.9 million, according to the average of 12 estimates compiled by Bloomberg.

The average price of Brent crude, the global benchmark, slumped to the lowest in almost 12 years in the quarter. That hampered efforts by Chief Executive Officer Bob Dudley to boost earnings even after he trimmed billions of dollars of spending, cut thousands of jobs and deferred projects to weather the market rout. BP’s quarterly results, the first among the world’s oil majors, are likely to be an indication of how the others will perform.

Brent’s decline below $28 a barrel in January made crude cheaper for BP’s refineries, yet weak fuel demand during a mild winter in Europe and the US drove down refining margins. Global processing margins dropped to $10.50 a barrel in the first quarter, 31 per cent lower than a year earlier and 20 per cent lower than the preceding quarter, according to data on BP’s website.

Oil has rallied since then, rising above $45 as U.S. crude production slows and major producers including Saudi Arabia study a possible cap on output. The increase in prices has pushed up BP’s shares 1.8 percent this year after a 14 per cent decline in 2015.

The company started cutting costs and selling assets following the 2010 oil spill in the Gulf of Mexico. In October, it lowered its 2015 capital-spending forecast to about $19 billion after investing about $23 billion in 2014. BP said then it expects to spend $17 billion to $19 billion a year through 2017.

Total SA is scheduled to publish first-quarter earnings on Wednesday. Exxon Mobil Corp. and Chevron Corp. will announce results on April 29 and Royal Dutch Shell Plc on May 4.

© 2016 Bloomberg L.P