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BP and Shell profits under renewed pressure as oil price hits 2017 low


Crude slumped last week after a shock rise in US stockpiles, up 3.3million barrels to 513million, according to the Energy Information Administration (EIA). 

Brent crude slipped to about $48 a barrel, its lowest level since December, and analysts said it could go sharply lower. 

Crude dipped below $27 a barrel in January last year and Chris Beauchamp, chief market analyst at online trading platform IG, said a repeat of those levels is a distinct possibility: “Crude tends to overshoot on both the upside and the downside.”

The oil price recovered after Opec and non-Opec producers agreed to cut output last December, but Beauchamp added: “The world is still drowning in oversupply.”

Shale drillers have made up for reduced output and the EIA predicted last week that daily US production could hit a record 10million barrels next year.

“Opec is fighting a losing battle,” Beauchamp added.

Even rising tensions in the Middle East, with Saudi Arabia, the United Arab Emirates, because of its support for Islamist groups, as well as recent terrorist attacks in Iran, have failed to lift the oil price for long.

BP and Shell have worked hard to survive cheaper oil by cutting capital expenditure and selling non-core assets, but their fightback is imperilled.

However, Beauchamp added: “I expect them to keep paying their generous dividends for now.”

Fawad Razaqzada, market analyst at, said oil is heading lower: “There is nothing to support prices in the short-term.”

Cheaper oil may trim UK inflation, but he added: “Given that tax makes up most of the price we pay at the pumps, the benefit for consumers will be marginal.”

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