Week Ahead: Oil companies set to reveal their profits have been dented

The major oil companies are set to reveal that their profits have been dented by a fall in the price of Brent crude.

BP, Shell and BG are all due to report on third-quarter trading this week, and a lower oil price is expected to cause earnings from the major European oil firms to fall 29 per cent from the second quarter, according to Investec.

Analyst Neill Morton says investors are hoping for “upstream beats” – growing production more than expected – as cost savings start to bear fruit.

“This would underpin confidence that the majors are indeed on that fabled path towards cash neutrality,” he added.

BP’s results on Tuesday could see pre-tax profits tumble by as much as 70 per cent from a year ago to $1.57bn (£1.03bn) if Mr Morton’s forecasts are on the money.

It could be a similar story on Thursday for Shell, whose underlying earnings are expected to tumble 55 per cent to $2.65bn, while it could be worse still for BG Group on Friday, with pre-tax profits anticipated to crash 82 per cent to $230m.

Shell’s £45bn takeover of BG still needs the green light from regulators in Australia and China, having already been approved by the EU, US and Brazil.

Aside from the oil world, there are also third-quarter updates from the banks.

Barclays is scheduled to release a third-quarter statement on Thursday, which could see former JPMorgan investment banker Jes Staley formally unveiled as its new chief executive.

Investec analyst Ian Gordon forecasts £1.8bn in underlying pre-tax profit for the third quarter, which is a 4 per cent decline on last year.

There are also third-quarter figures from Royal Bank of Scotland out on Friday, with an interim management statement for Lloyds Banking Group covering the same period due out on Wednesday.

The pharmaceutical sector also gets in on the action, with third-quarter results on Wednesday from drugs giant GlaxoSmithKline.

UBS says investors’ focus will be firmly on Glaxo’s respiratory and HIV arms, which it says will define its profits for the next four years.