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BP and Shell slip up on Crude bottom

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ROYAL Dutch Shell and BP are set to blame the weak oil price for dramatic falls in third-quarter pre-tax profits and revenues, analysts say.

By GEOFF HO: Sun, Oct 25, 2015

The price of crude oil has nearly halved over the past 12 months because of a Saudi Arabia-led effort by the Opec cartel to crush competition from US shale oil operators. 

On Tuesday, BP is expected to say its third-quarter profits have slumped 57.5 per cent to $2.2billion (£1.4billion), with revenues down 47.6 per cent to $49.2billion (£31.9billion), even though analysts believe that its refining, processing and retail divisions have performed well. 

On Thursday, arch rival Shell is also likely to produce a weak set of results. 

The consensus forecast has Shell’s profits for the quarter down 48.3 per cent to $4.5billion (£2.9billion), while its revenues are expected to be down 44.4 per cent to $60billion (£38.9billion). 

On Friday, Brent Crude Oil closed at $47.96 a barrel

Aside from the weak oil price, Shell’s results will be hit by its decision to abandon exploration of the Arctic, after tests at its Burger J well in the Chukchi Sea failed to find enough oil and gas to justify the cost of its development. 

It had invested around £5billion in the project. Despite divisions, Opec members have maintained their production levels, despite a glut of supply, in order to defend their global market share. 

By driving down the price, Opec has dramatically increased the costs of US shale oil firms, placing them under immense financial strain.

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