BP's Profits Hit by Weak Refining Margins and Lower Oil Trading

BP's second-quarter profits are projected to be dented by up to $700 million due to weak refining margins and lower oil trading results. This has led to a decline in its shares and changed analyst earnings estimates, impacting CEO Murray Auchincloss' strategy to rebuild investor confidence.

BP announced on Tuesday that its second-quarter profit could be reduced by up to $700 million due to weak refining margins and lower oil trading results, causing its shares to fall by more than 3%. This has prompted several analysts to lower their earnings estimates, impacting CEO Murray Auchincloss' plan to regain investor confidence.

Exxon Mobil also warned of reduced second-quarter profits due to lower refining margins and natural gas prices. BP highlighted that their refining margins have been impacted by weak diesel prices and narrower North American heavy crude oil differentials. These factors will lower earnings by $500 million to $700 million compared to the previous quarter. However, resumption in operations at the Whiting refinery is expected to offset these losses by around $500 million.

BP is also set to record $1 billion to $2 billion in charges related to the review of its Gelsenkirchen refinery in Germany. BP's shares dropped 3.8% following this update. Analysts from Citi and Jefferies foresee significant downgrades in BP's earnings estimates. BP plans to post its quarterly results on July 30, with oil and gas production expected to remain steady. Higher realised oil prices in the second quarter may boost profits by $100 to $300 million. Last week, Shell also reported a projected impairment charge of up to $2 billion due to its Singapore refinery sale and halted biofuel plant construction in the Netherlands.

(With inputs from agencies.)