The British Petroleum has predicted a robust for crude oil and weak supply in 2016.
The company indicated in its 2016 first quarter report that market fundamentals would continue to suggest that the combination of robust demand and weak supply growth will move global oil markets closer into balance by the end of the year.
It maintained that underlying replacement cost profit1 for the quarter was $532 million, compared with $196 million for the previous quarter and $2.6 billion for the first quarter of 2015.
The company disclosed that compared with the previous quarter, lower costs throughout the Group more than offset the impact of significantly weaker oil and gas prices and refining margins.
Bob Dudley, BP group chief executive, said: â€œDespite the challenging environment, we are driving towards our near-term goal of rebalancing BPâ€™s cash flows. Operational performance is strong and our work to reset costs has considerable momentum and is delivering results. Furthermore, development of our next wave of material upstream projects is well on track.â€
The company noted that Brent oil marker price averaged $34 a barrel in the quarter, compared with $44 in 4Q 2015 and $54 in 1Q 2015, and refining margins were at the lowest quarterly average for over five years.
It observed that Brent prices have so far averaged $40 in the second quarter.
The company announced an unchanged dividend for the quarter of 10c per ordinary share, expected to be paid in June.
It said that underlying operating cash flow2 in the first quarter was $3.0 billion.
The company maintained that this excluded $1.1 billion of payments related to the Gulf of Mexico oil spill which were offset by divestment proceeds of $1.1 billion.
It noted that operational performance continued to be strong with reliability of Upstream operated assets and refining availability both at 95per cent.
The company disclosed that organic capital expenditure in the first quarter was $3.9 billion compared to $4.4 billion in the first quarter of 2015.
It maintained that BP now expects total organic capital expenditure in 2016 to be around $17 billion and, in the event of continued low oil prices, sees flexibility to move to $15-17 billion in 2017.
The company maintained that costs are also reducing; BPâ€™s cash costs3 over the last four quarters were $4.6 billion lower than in 2014. BP expects cash costs for 2017 to be $7 billion lower than for 2014.
Brian Gilvary, chief financial officer, said: â€œAs we steadily take out more costs, the point at which we expect to be able to rebalance 2017 organic sources and uses of cash continues to move lower; we currently anticipate being able to achieve this at oil prices in the range $50-55 a barrel. This progress underpins our commitment to sustaining BPâ€™s dividend as the first priority within our financial frame. Should prices remain low, we have the flexibility to adjust further within the financial framework.â€