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BP's First Quarter: a Hard Act to Follow


BP (BP - Get Report) fired the starting gun on European oil majors' quarterly reporting season on Tuesday, announcing a $583 million quarterly loss that masked a surprisingly strong underlying result.

The London-based oil producer's underlying replacement cost profit, a figure that strips out one-time items and changes to inventory value, came in $532 million in the black. A quarterly operating profit!

Shares were up more than 4% in midday trading in London.

Sure, the figures are still lackluster. In the first quarter last year, BP made $2.57 billion on an underlying replacement cost basis. But this is not a moment to focus on comparisons; it is the context and momentum that are important.

The company increased its underlying profit despite the worst quarter for oil prices in almost a decade. Oil prices averaged $34 a barrel over the first quarter of 2016, down from $54 in the first quarter of 2015 and $44 in the last quarter of 2015, when BP scraped together a thin $196...