Oil prices help BP boost profits

Oil giant BP has reported a 23% rise in quarterly profits, thanks to a "robust trading environment".

Recent high oil prices helped BP boost net profit for the three months to June to $3.9bn (£2.1bn), from $3.2bn for the same period last year.

For the first half of 2004 overall, its profits were up to $8.6bn from $7.2bn.

The figures came in at the bottom of market expectations. But BP said it was well on track, and would be continuing with its share buy-back programme.

Production increasing

The firm added that it expected oil prices to remain high because of continued strong demand and constraints on capacity.

Analysts had forecast that BP would report second-quarter profits of between $3.9bn and $4.5bn.

"This has been another strong performance against the backdrop of a robust trading environment," said BP chief executive Lord Browne.

BP's oil production increased by 18% in the second quarter, compared with a year earlier, led by its interests in Russia.

Looking ahead Lord Browne said he believed oil prices would remain near recent 20 year highs.

"Oil prices should remain supported by limited spare OPEC production capacity and further oil demand growth," he said.

Despite BP's profits coming in at the bottom of expectations, Peter Hitchens, an analyst at Cheuvreux, said BP's prospects remained good.

"BP's future looks bright," he said.

BP is the first major oil company to report its second quarter and half year results, to be followed this week by Exxon and Shell.