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Bp Profits Plunge 53% On Falling Oil Prices

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BP today reported better-than-expected profits of $3.1 billion (£1.9 billion) for the second quarter but will cut a further $1 billion in costs as global demand for oil remains under pressure.

Profits for the three months to June 30, fell 53 per cent on the same period last year but a sharp decline had been forecast because of the drop in the cost of oil.

In July last year, oil prices peaked at $147 a barrel — crude is now trading at 53 per cent below its high at $68 a barrel as recession-hit global economies cut back on demand.

Analysts had expected BP to achieve profits of about $2.8 billion in the second quarter but the company was able to deliver higher returns after improvement in its refining operation.

Tony Hayward, the chief executive of BP, has been restructuring underperforming parts of the business and announced today that he had already hit the 2009 target of a $2 billion cost reduction.

The company will now look to drive out a further $1 billion of costs. BP's total first half profits were 57 per cent down on last year at $5.5 billion.

BP kept its second quarter dividend at 14 cents a share, although because sterling has weakened this represents a 22 per cent increase for British investors.

Mr Hayward said that the global economy looked to be stabilising but he cautioned that any return to growth could be sluggish, which will have an impact on demand for oil.

"The overall picture is of energy demand now stabilising following significant falls in the first half of the year," he said. "We see little evidence of any growth in demand and expect the recovery to be long and drawn out."

So more jobs to go to keep the billions in profit rolling in?

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