BP reported a 96 per cent drop in fourth-quarter profits as the hit to energy demand from the pandemic and weaker trading results took the UK oil major to its first annual loss in a decade.Underlying profit on a replacement cost basis — the measure of income tracked most closely by industry analysts — was $115m in the three months to December 31.This fell short of analyst expectations of a profit of $370m, according to a company-compiled estimate, and compares with $2.6bn in the same period the year before.

It has been a brutal year for the industry, with lockdowns and travel bans causing big drops in earnings.For the full year, BP slumped to a loss of $5-7bn, from a $10bn profit in 2019, because of the collapse in energy prices, a writedown in the value of oil and gas assets by billions of dollars and depressed demand.The group said quarterly performance was “significantly” hit by lower fuel sales and refining margins. It also blamed weaker gas marketing and trading results, and higher exploration write-offs.

“The weather was colder in Asia than we had thought and warmer in America than we had thought,” Bernard Looney, chief executive, said in an interview. “Our traders were caught.”BP, which returned to profit in the third quarter, had already warned of a volatile outlook.Oil demand is anticipated to rebound in 2021 and it expects to benefit from higher gas prices in future. But fuels sales and refinery margins are forecast to remain under pressure.

The price of crude oil has recovered from last April’s lows — below $20 a barrel — helped by a nascent market recovery and the rollout of vaccinations. Although Brent crude is again above $55 a barrel, it is far from the $70 level of a year ago.

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