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Last Updated: Sunday, 24 October, 2004, 15:01 GMT 16:01 UK
Oil firms 'set for profits boost'
BP petrol station
BP is to report its results on Tuesday
BP and Shell are on track to report record quarterly profits this week, helped by surging world oil prices, according to a press report.

Analysts expect BP to unveil third quarter earnings of $4.5bn (2.5bn) on Tuesday, the Sunday Telegraph reported.

Shell is expected to announce third-quarter profits of about $4.7bn (2.6bn) two days later.

The forecasts suggest both companies made profits of about $50m (27m) a day in the three months to September.

Tight supplies

The projected jump in profits at BP and Shell reflects an 80% surge in crude oil prices in the past year, triggered by fears that world supplies are struggling to keep pace with soaring demand.

A jump in oil consumption in the US and China over the past two years has coincided with a spate of supply disruptions, sharply reducing the oil industry's spare production capacity.

On Friday, US light sweet crude touched an all-time high of $55.50 a barrel in New York, while Brent crude, the UK benchmark, rose to $51.65.

This followed the publication of official figures showing that US stocks of heating oil had fallen for the fifth consecutive week.

Strong results from Shell would help the firm draw a line under shock revelations in January that it had overestimated its oil reserves by 20%.

The announcement shook investor confidence in the firm, forcing its share price sharply lower, and eventually led to the resignation of its chairman, Sir Phillip Watts.

While high oil prices have boosted BP and Shell's financial performance, analysts warn that rising energy costs could seriously dent global economic growth in the months ahead.

Economists point out that oil prices remain below the inflation-adjusted peak of $80 a barrel they reached in 1981.

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