* BP reports strong Q1 gas and oil trading results
* Energy major had slightly lower refined oil volumes
* Polar Vortex created extraordinary volatility in US mkts
By David Sheppard
LONDON, April 29 BP Plc became the latest
energy company on Tuesday to show strong trading results in the
first quarter as the coldest winter in three decades in the
United States provided a boost to many power and gas dealers.
The energy major said its trading operations had helped
offset lower returns elsewhere in the group. It cited "strong
gas marketing and trading results and higher gas realizations,"
which is industry jargon for a profit increase resulting from
extraordinary volatility in gas prices.
The so-called 'Polar Vortex' in the United States briefly
upended the U.S. natural gas market, with physical prices at the
primary New York trading hub spiking more than 20-fold in one
day during January as utilities scrambled to secure supplies.
Those trading conditions have led a number of firms,
including Wall Street banks Goldman Sachs and Morgan Stanley, to
report higher-than-expected returns from their energy trading
arms in the first quarter.
"Overall results were strong in both gas and oil trading
globally in the first quarter," said BP spokesman David Nicholas
in London, declining to give more details.
BP is by far the biggest trader of physical natural gas in
the United States, according to data from the Federal Energy
Regulatory Commision (FERC), and is also an active trader of
electricity supplies. Its results also include its global
liquefied natural gas (LNG) business.
While BP doesn't break out revenues for its trading
operations, it did report slightly lower year-on-year levels of
refined product sales and trading, pointing to particularly
strong results in its gas and power operations.
In the first quarter, BP sold 5.2 million barrels per day
(bpd) of refined products through its marketing and trading
operations, down from 5.4 million bpd in the same quarter last
year. Its refineries processed 1.7 million bpd of crude during
the same period this year.
"The supply and trading result was strong for the first
quarter, similar to levels achieved in the same period of 2013,"
BP said in its quarterly statement to shareholders.
BP on Tuesday reported a 24 percent drop in overall
first-quarter underlying replacement cost profit to $3.2
billion, slightly ahead of a consensus forecast of $3.1 billion.
Trading makes up a bigger part of BP's operations than at
many other energy majors. Rivals such as Exxon Mobil say
that while they market their oil and refinery output to
customers, they don't actively trade.
Its annual report in February revealed that BP had benefited
in the first six months of 2013 from big swings in crude oil
prices, with the U.S. benchmark WTI contract sharply narrowing
its discount to international benchmark Brent.
Its massive 405,000 bpd refinery in Whiting, Indiana, is
expected to increase the amount of heavy, discounted Canadian
crude it processes to 280,000 bpd in the second quarter from
around 200,000 bpd, the company said.
The last time BP disclosed its annual trading results in
2005 it showed earnings of $2.97 billion, or over a tenth of its
overall net profit that year.
(editing by Jane Baird)