May 2 (UPI) -- Supply and demand are slowly starting to align on the energy market, BP said, though sector trajectory won't expand much beyond the current stage.
The British energy company reported a first quarter profit of $1.5 billion, compared with a year-over-year loss of $583 million. BP is joining its industry peers in reporting a strong recovery in early 2017, after slogging through a 2016 market that saw crude oil prices drop below $30 per barrel.
Brent crude oil prices are struggling to break through $52 per barrel in early Tuesday trading, after flirting with $60 per barrel earlier this year. The January implementation of an agreement coordinated by the Organization of Petroleum Exporting Countries to balance the market through managed production declines has nonetheless helped establish a floor price for crude oil at around $50 per barrel.
The company said its average realized price for oil in the first quarter was more than double figures from the same time last year. Production, meanwhile, was 3 percent higher than first quarter 2016, though output for the second quarter is expected to be relatively flat.
Brian Gilvary, the company's chief financial officer, said that despite a $4 per barrel improvement in crude oil prices from the fourth quarter, the market direction was still unclear given the uncertainty surrounding the durability of OPEC's production agreement and the level of shale oil production from the United States.
"But overall we expect the market fundamentals, driven by above average demand, to support a continued rebalancing," he said in a statement.
Balance has been a buzzword for the market at least since OPEC began negotiations in coordinated production declines in September. The sentiment since then has been fluid, with the International Energy Agency in March calling for patience. Despite the cap on production, crude oil stockpiles in the world's leading economies continue to build up, suggesting some pressures from the glut remain, the report read.
Ole Hansen, the head of commodity strategy at SaxoBank, told UPI in response to email questions that Gilvary's sentiment was likely on target provided there are no major shocks emerging in the medium term.
"I agree with his view that the forward price risk is skewed to the upside but that no fireworks can be expected unless we face a major and unforeseen supply disruption," he said.