BP, Europe's second-biggest oil company, reported profit that beat analyst estimates because of an improved performance at its fuel trading business.

The shares rose the most in six months in London trading. Earnings adjusted for one-off items and inventory changes fell to $4.2 billion (€3.2 billion) in the first quarter from $4.7 billion a year earlier, the company said today in a statement.

That exceeded the $3.2 billion average estimate of 11 analysts.

Net income tripled to $16.9 billion after BP sold its half of the TNK-BP unit in Russia.

Chief executive officer Bob Dudley is trying to convince investors that BP is poised for growth three years after the Gulf of Mexico oil spill that left the company with a bill of more than $40 billion.

The trading gain offsets a drop in oil prices and a production decline following divestments.

BP is “highlighting stronger trading and gas marketing earnings,” said Iain Reid, an analyst at Jefferies Group LLC in London. “Shares are likely to pop today” on “excellent” results, he said. BP produced the equivalent of 2.33 million barrels of oil a day in the quarter.

That’s 5 per cent lower than a year earlier, though 2 per cent higher than in the fourth quarter.

Output in the second quarter will probably be lower, BP said. Exxon Mobil, the world's biggest company, last week reported an increase in profit on the strength of its chemicals business.

Chevron and Total SA reported a drop in net income. Royal Dutch Shell, Europe's biggest oil company, may say on May 2 that profit slid to $6.5 billion from $7.28 billion, a Bloomberg survey of 11 analysts shows.

The shares rose 4 per cent to 475 pence as of 8.01 am in London, the steepest intraday gain since October 30.

The stock retreated 7.8 per cent last year. Fuel trading helped BP increase downstream profit to $1.3 billion in the first quarter from $490 million a year earlier, the company said.

“These strong first-quarter results demonstrate the progress BP is making,” Dudley said in a statement.

The latest earnings “represent a strong start to 2013 across all of our businesses.” The business of turning crude into gasoline and other products is improving.

Global refining margins were $17.80 a barrel in the first quarter compared with $14.75 a year earlier, according to BP’s refining marker margin, a generic indicator of refining profitability.

Mr Dudley has completed at $38 billion asset sale program a year ahead of schedule and repositioned the company in Russia by selling BP’s half of the TNK-BP venture.

The deal left BP with about 20 per cent of state-backed OAO Rosneft and $12 billion in cash, most of which will be used to buy back $8 billion in shares.

BP said in February that underlying oil and gas production, stripping out the impact of divestments, should increase this year after little change in 2012. Reported output will decline as divestitures shave off 150,000 barrels a day.

BP’s asset sales are designed to focus output on its most profitable fields. Investment will rise in 2013 to as much as $25 billion from $23 billion last year as four new projects start in Angola, Australia, the Gulf of Mexico and Azerbaijan.

Investment will rise to between $24 billion and $27 billion from 2014 to the end of the decade, the company said.

The spending comes as benchmark Brent crude, used to price two-thirds of global sales, is starting to slide.

Bloomberg