British Petroleum Could See 20% Drop Due to Low Oil Prices

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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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza