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Energy giant BP reported a significant fall in first-quarter net profit on Tuesday, as oil prices continue to dive amid intensifying concerns about the coronavirus crisis and dwindling storage capacity.
The U.K.-based oil and gas company posted first-quarter underlying replacement cost profit, used as a proxy for net profit, of $800 million. That compared with $2.4 billion in the first quarter of 2019, reflecting a fall of 67%.
Analysts had expected first-quarter underlying replacement cost profit to come in at $987 million.
“A good quarter but, undoubtedly, a very brutal environment,” BP CEO Bernard Looney told CNBC’s “Squawk Box Europe” on Tuesday.
BP’s results come shortly after a historic plunge in oil prices. The May contract of U.S. West Texas Intermediate plunged below zero to trade in negative territory for the first time in history last week. Trading volume was thin given it was the day before the contract’s expiration date, but the move lower was unprecedented nonetheless.
WTI futures had fetched more than $60 a barrel at the start of the year. A dramatic fall-off in demand as a result of the coronavirus outbreak has sent oil prices tumbling.
On Tuesday, the June contract of WTI traded at $10.96 per barrel, more than 14% lower for the session, while international benchmark stood at $19.16, down over 4%.
“The real situation that we have here is a fundamental situation of supply and demand,” Looney said. “Demand in the second quarter, we think, will be down around 16 million barrels per day worldwide this year. And that’s about five times the previous demand destruction which we saw in the global financial crisis in 2008 to 2009.”
Shares of BP have fallen approximately 35% since the start of the year.
