Losses narrow at oil giant BP as price of crude bounces back

Under-fire oil giant BP narrowed losses in the first three months of the year as swingeing cost-cutting helped it offset falling crude prices.

BP posted replacement cost losses of 485million US dollars (£335m) for the first three months of the year, down from losses of 2.2bn US dollars (£1.5bn) in the previous three months.

On an underlying basis, the group also defied expectations for a loss, posting adjusted profits of 532m US dollars (£367m), although this still marked a 79% plunge on the 2.58bn US dollar (£1.8bn) profit reported a year earlier.

The update comes less than two weeks after BP suffered an investor rebellion over its chief executive’s pay deal at its annual general meeting, when almost 60% of shareholders rejected its remuneration report for the last year, which included a salary package of 19.6m dollars (£13.8m) for chief executive Bob Dudley.

Its figures show trading has improved markedly since a dire end to 2015, with oil prices touching near 13-year lows.

The global commodity price rout saw the cost of crude drop to 34 US dollars a barrel on average in the first three months of 2016 compared with 54 US dollars a year ago.

The oil price crash left BP nursing its largest annual loss for at least 20 years, slumping into the red by 5.2bn US dollars (£3.6bn) in 2015, surpassing even the mammoth losses seen in the wake of the Deepwater Horizon explosion and oil spill in the Gulf of Mexico in 2010.

While BP’s losses have narrowed in the first quarter of 2016, it still compares with replacement cost profits of 2.1bn US dollars (£1.4bn) a year earlier.

However, the cost of crude has bounced back in recent weeks, now trading at around 45 US dollars a barrel, while BP is also beginning to see the benefits of swingeing cost-cutting actions.

Mr Dudley said: “Despite the challenging environment, we are driving towards our near-term goal of rebalancing BP’s cash flows.”