Energy company BP has joined a number of oil companies in posting earnings that were greater than expected for quarter two thanks to higher prices of oil.
Underlying replacement cost profit at the company rose from $2.6 billion in the first quarter to $2.8 billion in the second quarter. It credits increased oil prices for the rise, but it notes that lower performance from its gas trading and marketing offset the result somewhat.
The company believes oil stocks will decline to historic levels by early 2022 thanks to the easing of coronavirus restrictions around the world, which provides a better macroeconomic outlook and increases the demand for oil products. It has noted, however, that the decisions made by the OPEC+ group will be crucial in determining how the market rebalances and the level of oil prices.
In a statement, BP said it expected demand for products in all its businesses to continue increasing. It also expects refining margins to increase, including for its lubricant business, due to a shortage of raw materials for products like hydraulic oil – providing restrictions are not tightened. According to Market Watch, the company said:
“We expect higher product demand across our customer business in the third quarter. Realized refining margins are expected to improve slightly supported by stronger demand and wider North American heavy crude oil differentials. In Castrol, industry base oil and additive supply shortages are expected to continue.”
BP’s CEO, Bernard Looney, also said the oil major was making good progress in transitioning to becoming an integrated energy company, with it leveraging its strong performance to invest in its future businesses.