The dramatic effect of falling oil prices on profits in the energy sector will be underlined this week as BP unveils third quarter earnings that could be as much as 20% lower than the same period last year.
The cost of crude on global markets has plunged since June, reflecting faltering growth in the world economy, reduced fears about Middle East production levels and soaring US shale output.
Shares in BP, yet to recover to levels seen before the Deepwater Horizon disaster in 2010, have fallen by 13% this year on the back of the lower oil price, while Exxon Mobil and Chevron stock is down by 7%.
BP’s quarterly financial figures will also be damaged by lower oil and gas output from maturing fields, along with the effect of its disposal programme, which has seen many assets sold off to help pay the bill for the Gulf of Mexico disaster.
Fadel Gheit, an analyst with New York brokerage Oppenheimer, said he had pencilled in a 16% fall in BP profits, slightly less than the 20% average expected by other Wall Street analysts.
“BP results are not going to be something to write home about. It is not a great surprise because I estimate the average selling price of its oil over that quarter is down from $110 per barrel to $102,” he said.
via The Guardian
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