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Higher oil prices helped BP double profits in the fourth quarter from the same period last year, although the results lagged a little behind analysts’ expectations.

The UK oil major reported underlying replacement cost profit of $400m, compared with $196m for the same period of 2015. Analysts had, on average, expected about $560m.

In a tentative sign of confidence returning to the oil sector as prices stabilise, BP raised its projection for capital investment this year to $16bn-17bn. The group had previously guided for $15bn-17bn and said spending was likely to be towards the bottom of that range.

The increased investment would result in a break even point at which BP can cover its dividend and spending of $60 per barrel at the end of 2017 — an increase from a previous target for $55. This suggests a gradual shift in focus towards growth from the cost-cutting of the past few years.

BP has made a flurry of acquisitions, including assets in Abu Dhabi and west Africa, and launched several new projects over recent months as the group attempts to rebuild its portfolio after deep retrenchment since the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

However, BP said it would remain disciplined on spending after hitting a target to reduce annual costs by $7bn from the 2014 level a year early.

Bob Dudley, BP group chief executive, said: “We have delivered solid results in tough conditions – and are well prepared for any volatility in oil pricing. Continued tight discipline on costs remains essential. Everything we have done during the year has made us a more resilient and competitive company.”

Costs related to the Deepwater Horizon disaster remained a drag on BP at $800m in the fourth quarter. Results were held back by lower-than-expected earnings from BP’s stake in Rosneft of Russia but the group’s own upstream exploration and production income was higher than expected as it benefited from higher oil prices compared with last year.

Despite the rebound in the fourth quarter, the average price of Brent crude over the whole of 2016 was the lowest for 12 years at $44 per barrel.

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