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Financial performance | |
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Business environment Trading conditions in 2003 were affected by tight supplies in oil and gas markets and by a world economic recovery, following two years of below-trend growth. The global economy is expected to strengthen further in 2004. Average crude oil prices in 2003 were the highest for 20 years, driven by supply disruptions in Venezuela, Nigeria and Iraq, OPEC market management and a recovery in oil demand growth following three exceptionally weak years. The Brent price averaged $28.83 per barrel, an increase of almost $4 per barrel over the $25.03 per barrel average seen in 2002, and moved in a range between $22.88 and $34.73 per barrel. Natural gas prices in the US were also exceptionally strong during 2003. The Henry Hub First of the Month Index averaged $5.37 per million British thermal units (mmBtu), up by more than $2 per mmBtu compared with the 2002 average of $3.22 per mmBtu. A combination of cold first-quarter weather and weak domestic production kept working gas inventories relatively low for much of the year. UK gas prices were also up strongly in 2003, averaging 20.28 pence per therm at the National Balancing Point compared with a 2002 average of 15.78 pence per therm. Refining margins weakened somewhat towards the end of the year but were above historical average levels for 2003 as a whole, reflecting low commercial product inventories in key US and European markets. Retail margins for the year were relatively strong, especially in the US and Europe. Petrochemicals margins remained depressed in 2003, coming under pressure from high feedstock prices. |
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