Europe's second largest oil company, BP, reported a 53 per cent drop in its second quarter profit.
Low fuel price hits BP profit in Q2
The second-biggest oil firm in Europe also reported second-quarter cash flow improved marginally to $6.8bn from $6.7bn a year ago. This was because BP pumped more oil and gas, even as revenue fell 49 per cent to $56.56bn from $110.98bn.
"BP has now thrown down the gauntlet to the rest of the oil supermajors, who will report their numbers over the next few days," Richard Hunter, the head of UK equities at the stockbroker Hargreaves Lansdown, told Reuters.
BP's main European and US competitors, Royal Dutch Shell, Total, ExxonMobil and Chevron, are all due to report their second-quarter results later this week.
"BP may not be able to control the price of oil, but their measures to streamline the business and reduce costs show the board is in tune with the ebbs and flows of the market," said Manoj Ladwa, a senior trader at ETX Capital in London.
But the company's shares were flat at $51.34 in early trading on major exchanges Tuesday.
Peter Hitchens, an analyst with the London stockbroker Panmure Gordon, said BP was starting to deliver long-promised production increases, but the operating environment for oil and gas companies would continue to depress its shares.
Tony Hayward, the BP chief executive, said Tuesday: "We see little evidence of any growth in demand and expect the recovery to be long and drawn out."
New York oil prices slipped below $68 per barrel yesterday, amid mixed economic and corporate news.
Crude is well off the high of $147 per barrel it reached last summer.
BP said its second-quarter oil and gas production rose 4 per cent, as it brought new fields in the Gulf of Mexico on stream. The company predicted its output would continue to climb during the rest of this year, producing its first substantial output increase since 2004.
This year, BP became the largest oil and gas producer in the Gulf of Mexico, after boosting output from the Thunder Horse platform and bringing the Dorado and King South fields on stream. The deepwater projects have helped US oil production climb for the first time since the 1970s. Projects likely to help raise BP's future output include a joint venture with China National Petroleum Corporation and Iraq's state-owned South Oil Company to nearly triple production from the biggest Iraqi oilfield. The alliance was the only consortium to win a deal last month in Iraq's first post-war oil and gas licensing round. Mr Hayward said he expected the agreement would be finalised by the end of this year.
Almost two years into its continuing efficiency drive, BP expected to beat an earlier target for cutting costs, he said, but he insisted lower spending would not impair the safety of BP's operations, as an earlier round of cost cuts may have done.
About a decade ago, when crude fell below $10 per barrel, Mr Hayward's predecessor, John Browne, introduced cost reductions that regulators, politicians and industry figures later blamed for safety and environmental problems. Those included a Texas refinery explosion in 2005 and oil spills from poorly maintained pipelines in Alaska.