LONDON (Reuters) - BP’s oil trading business made a small loss in the second quarter, Chief Financial Officer Brian Gilvary told Reuters on Tuesday, while overall profit beat expectations.
The world’s biggest oil traders have counted hefty losses after a surprise doubling in the price discount of U.S. light crude to benchmark Brent in just a month, as surging U.S. production upended the market.
“It was a tough market to call. We’re certainly not the only trading group that lost money in the second quarter,” he said, adding that oil trading, which gets reported through BP’s downstream business, had made losses twice before in the last five years.
“There were some specific positions around some particularly difficult market calls and we got the call wrong, it’s as simple as that.”
Over the first half, oil trading made a profit, Gilvary said.
“It was about one specific position in one book where they made the wrong market call and actually they did a very good job of exiting that position,” he said, declining to give further details.
Trading desks of oil major BP and merchants Vitol, Gunvor and Trafigura have recorded losses in the tens of millions of dollars each as a result of the “whipsaw” move when the spread reached more than $11.50 a barrel in June, insiders familiar with their performance told Reuters.
Shell Chief Financial Officer Jessica Uhl said last week that Shell’s oil trading profits fell short of expectations in the first half of the year.
Gilvary said he expected oil prices to stay within a $5 range around current prices for the next six months.
Reporting by Shadia Nasralla, editing by Louise Heavens