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BP SWINGS TO PROFIT AS OIL SECTOR SHAKES OFF WOES
BP PLC was the latest big oil company to report an increase in profit in the first quarter Tuesday, adding to hopes that the sector may have turned a corner, writes Sarah Kent.
“The British oil giant said it swung to a profit in the first quarter, benefiting from a roughly 60% increase in prices since the first quarter of 2016 and higher production volumes. BP said its replacement cost profit—a number analogous to the net income that U.S. oil companies report—was $1.4 billion in the first quarter, compared with a loss of $485 million in the same period a year earlier,” the Journal reports.
The results are the latest in a series of positive earnings reports by the world’s biggest oil companies, several of which have enjoyed their most successful quarter in more than a year.
The improvement in financial performance has left investors hopeful that the sector may be recovering from a more than two-year slump in oil prices.
Exxon Mobil Corp. on Friday reported its best quarter since 2015, while Chevron Corp., which reported a quarterly loss last year, on Friday, posted a profit of $2.7 billion and France’s Total SA reported a 77% rise for the first quarter. Royal Dutch Shell PLC is set to report later in the week.
ENERGY STOCKS STUCK IN A RUT EVEN AS PROFITS BOUNCE BACK
Although oil companies are experiencing a comeback, energy shares have been the stock market’s worst performer this year, writes Akane Otani.
“Shares of energy companies are down 10% in 2017, making the sector one of only two S&P 500 groups posting losses this year, along with the telecommunications sector. The broader index has risen 6.7%. Oil prices have slipped 9.1% this year as shale producers have ramped up production, raising angst again about an oversupplied market, “the Journal reports.
Meanwhile, in a positive sign for a production cut led by the Organization of the Petroleum Exporting Countries, Iran has signaled its readiness to cap its oil output until the end of the year, writes Emre Peker.
Despite wanting to boost output, Petroleum Minister Bijan Zanganeh said over the weekend that Iran has kept its oil production at 3.8 million barrels a day under an agreement brokered last year by OPEC and some critical external producers including Russia.
“Saudi Arabia has told OPEC officials that it wants to extend the cartel’s agreement to cut crude-oil production for another six months when the group meets on May 25 in Vienna. OPEC member Iran, which was allowed to limit rather than reduce its output under the deal, was seen as a potential obstacle,” the Journal reports.
“The reason OPEC tried to curtail production was because it wanted to remove the supply overhang,” said Emily Ashford, director of energy research at Standard Chartered. “And until evidence comes through that the overhang is reducing then they haven’t fulfilled the requirement.”
MARKETS
Oil prices edged up on Tuesday, supported by a softer dollar even as investors remain concerned about rebounding output from Libya and rising production in the U.S.
Global oil benchmark Brent crude, for July delivery, rose 0.58% to $51.82 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.43% at $49.05 a barrel.
A weaker dollar makes dollar-denominated commodities like oil more affordable for holders of other currencies. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, fell 0.04% on Tuesday. Read our latest market report at wsj.com
May 02, 2017 at 05:01PM
from Neanda Salvaterra
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