Shell quarterly profits surge after oil price rises

(c) Sky News 2017: <a href="http://news.sky.com/story/shell-quarterly-profits-surge-after-oil-price-rises-10862498">Shell quarterly profits surge after oil price rises</a>
 

Shell (LSE: RDSB.L - news) saw profits quadruple to $3.4bn (£2.6bn) in the first quarter as it became the latest to benefit from the upturn in the oil price.

Shares (Berlin: DI6.BE - news) rose 2% initially after the FTSE 100 giant posted better than expected results pointing to improved operational performance as well as "better market conditions". Its market value was only fractionally up by the close of trading.

It comes days after rival BP also revealed it had benefited from the recovery in the oil market as it swung back into profit for the first three months of the year.

Shell's quarterly profits were up 315% compared to the same period last year, when they came in at $814m (£631m).

The results were boosted by the rise in oil prices and deep cost cuts.

Oil companies have been under pressure after the price of Brent crude fell from more than $100 a barrel in 2014 to less than $30 at the start of last year.

They have since recovered above $50, partly thanks to an agreement by oil-producing countries to limit production in order to tackle the over-supply that was dragging on the price.

However, Brent was trading at five-month lows on Thursday - near $49 - as weaker Chinese economic data combined with higher-than-forecast US inventories to put pressure on prices worldwide.

A report by the Reuters news agency, citing information from delegates of the Opec cartel of oil-producing nations, later suggested there would be an extension to the current production cuts but no deeper output limits.

Commenting on the company results, chief executive Ben van Beurden said it was a "strong quarter for Shell".

He added that the group's takeover of smaller rival BG Group (EUREX: 1007667.EX - news) , which completed last year, was starting to pay off.

Shell has sold off around $20bn (£16 billion) of assets since its acquisition of BG, while earnings have also been boosted by hefty cost-cutting over the past three years.

It has been cutting thousands of jobs in response to the lower oil price and in February reported an 8% fall in annual profits.

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