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Energy giant BP reported a significant drop in first-quarter net profit on Tuesday as oil prices continue to decline amid growing concern about the coronavirus crisis and declining storage capacity.
The UK-based oil and gas company posted an underlying replacement cost gain in the first quarter, used as a proxy for net profit, of $ 800 million. That compares to $ 2.4 billion in the first quarter of 2019, reflecting a 67% drop.
Analysts had expected the first quarter underlying replacement cost gain to reach $ 987 million.
“A good quarter but certainly a very brutal environment,” BP CEO Bernard Looney told CNBC’s “Squawk Box Europe” on Tuesday.
BP’s results come shortly after a historic drop in oil prices. The US Texas Intermediate West Texas contract May. USA It fell below zero to trade in negative territory for the first time in history last week. Trading volume was low given that it was the day before the contract expiration date, but the downward move was unprecedented.
WTI futures had reached over $ 60 a barrel earlier in the year. A dramatic drop in demand as a result of the coronavirus outbreak has caused a drop in oil prices.
On Tuesday, the June WTI contract was trading at $ 10.96 a barrel, more than 14% lower for the session, while the international benchmark index stood at $ 19.16, below 4%.
“The real situation we have here is a fundamental supply and demand situation,” Looney said. “We believe that demand in the second quarter will decrease around 16 million barrels per day worldwide this year. And that is approximately five times the previous destruction of demand that we saw in the global financial crisis in 2008-2009.”
BP shares have fallen approximately 35% since the beginning of the year.
