Shares in London's oil majors, BP (BP.) and Royal Dutch Shell (RDSB), both ticked up on the publication of first-quarter results last week. The filings were also accompanied by glowing news headlines focusing on the "surge" in profits. This was understandable. BP's replacement cost profit - its preferred measure of profitability - hit $1.4bn (£1.1bn), against a loss of $485m in the first quarter of 2016. Two days later, Shell posted an even better profit leap, with the $3.4bn in earnings in the first three months of 2017 more than four times the comparative figure a year ago, and triple the final quarter of 2016.
But in the fast-moving and unpredictable world of commodities, those headlines looked somewhat incongruous. The majors' earnings came just as the price of Brent crude, the international benchmark for oil and gas prices, slipped towards levels not seen since Opec members struck a deal to curb supplies in late November.
When we last wrote about the oil price - prompted by the International Energy Agency’s (IEA) suggestion that the market was "very close to balance" - it was clear that summer pricing would be dictated by demand growth, the scale of US tight oil's resurgence and the ability of the parties to the Opec agreements to make good on their promises. Since then, the oil price has faltered on the latter two factors, principally the belief that a further extension to the Opec deal will not be sufficient - or sufficiently adhered to - to offset US shale production.