Eyes on BP as oil giant prepares to report profits

August Graham

BP WILL be hoping it can avoid the fate of its fellow London rival Shell tomorrow, when the oil major discloses how profitable it was in the second quarter of the year.

Analysts expect the oil giant to unveil billions of dollars in profit. But shareholders might be nervously eyeing Shell’s results announcement on Thursday ahead of the BP report.

Shell reported a $5.1bn (£3.9bn) profit in adjusted earnings, showing that its finances are returning closer to pre-energy crisis times.

But that was half a billion pounds lower than the $5.6bn that the company’s analysts had expected it to make.

Analysts already expect BP to make less money –about $3.5bn in underlying replacement cost profit –but investors might hope that it will not miss those expectations.

Shell said its profit had reduced due to it receiv- ing lower prices for the oil and gas that it sells.

The business also reported lower margins at its refining unit, sold less liquid natural gas (LNG) than the quarter before – LNG is generally more popular during winter in the northern hemisphere – and its LNG trading business also fared worse.

The fates of both companies often track each other closely. In May, both companies reported expectation-beating profits, Shell by £1.4bn and BP by about half a billion pounds.

Then, as now, their profits sparked calls for more to be done to ensure that the windfall from higher energy prices –which was sparked by Russia’s full-scale attack on Ukraine –does not benefit oil companies while ordinary people suffer. Labour and the Liberal Democrats on Thursday called for changes to the windfall tax after Shell and British Gas owner Centrica announced their results.

It is likely that the same will happen tomorrow when BP reports.

Oil prices rally due to revived hopes of Chinese demand amid Opec cuts

NICHOLAS EARL

OIL PRICES have seen five straight weeks of gains with investors convinced supply cuts and fresh risk appetite will cause markets to tighten.

Both major benchmarks will begin trading today having reported a five per cent upsurge from the previous week –and are on track to gain over 13 per cent in prices for the month.

Brent Crude began the week up 0.89 per cent at $84.99 (£66.16) per barrel, while WTI Crude is up 0.61 per cent at $80.58 per barrel.

This comes with increased sentiment towards investment and economic activity in the US. China has also pledged to step up stimulus measures. On the supply side, prices have also been boosted by supply cuts from Opec and its allies –the Opec+ alliance.

Saudi Arabia is likely to extend its oil output cut for another month to include September, Reuters reports, which will also support the market.