From mid-2014 crude plunged more than 70 per cent to near 13-year lows at the start of the year owing to a supply glut, overproduction, weak demand and a slowdown in the global economy. Though that’s quite a precipitous decline, the result was about US$100 million better than analysts had forecast. “With momentum and investment flows this strong, oil can easily overshoot to the upside just like it did to the downside back in Q1”, Mr Hansen said on Monday.
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Crude prices will average $41 per barrel this year, which is still down 19 percent from 2015, the Washington-based World Bank said Tuesday in its quarterly commodity-markets outlook. Despite the price falls, analysts said that sentiment had clearly turned bullish, and that further price rises were likely.
“The recent leg higher in oil prices is due to the tightening of the supply side of the market”, Jens Naervig Pedersen, an analyst at Danske Bank A/S in Oslo, said by e-mail. However, this could be cut to $15bn “in the event of continued low oil prices”.
The loss, on the replacement cost measure, compared with a $2.1bn profit for the same period past year, but was lower than the $2.2bn loss for the three months to December, reports The BBC.
Chief Executive Officer Bob Dudley, who last month faced a shareholder revolt over his pay package, signaled BP is continuing to drive down costs to ensure it can keep paying dividends.
The U.S. Commerce Department reported real gross domestic product increased at an annual rate of 0.5 percent in the first quarter, down from the 1.4 percent growth rate in the fourth quarter. The upstream business, including exploration and production, posted a loss of US$747 million after a profit of US$604 million in the first quarter of 2015.
In a milestone for the company, BP said the bulk of the costs from the 2010 Deepwater Horizon accident are now known after a U.S. District Court in April approved a settlement with the U.S. government and Gulf states.
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BP is the first oil major to reveal the financial impact of record-low oil prices in the first quarter; its peers Total, Statoil ASA (NYSE: STO) and Eni will reveal their quarterly impacts later this week, and Royal Dutch Shell Plc (NYSE: RDS.A) will report on May 4.
