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BP said on Tuesday it could cut capital spending further after reporting an 80 percent drop in profits in the first quarter of the year, when oil prices touched a near 13-year low.

The British oil company, the first major to report on one of the weakest quarters, lowered its 2016 spending target to $17 billion, from $17-19 billion, and said the marker could fall to $15-$17 billion next year if oil prices remain weak.

A British Petroleum (BP) logo is seen at a gas station in south London. REUTERS/Toby Melville

These cost reductions have enabled the oil producer to forecast it can balance its books at an oil price of $50-55 a barrel in 2017, it said, down from $60 previously eyed.

BP shares opened 3 percent higher on the London Stock Exchange on Tuesday, the second-biggest gainer in the blue-chip FTSE 100 index.

Chief Executive Bob Dudley said he expected crude prices to recover towards the end of the year as producers halt work on fields and fuel demand remains robust.

"Market fundamentals continue to suggest that the combination of robust demand and weak supply growth will move global oil markets closer into balance by the end of the year," Dudley said.

The BP CEO suffered an embarrassing shareholder revolt earlier this month when investors rejected his $20 million remuneration package.

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Faced with the worst downturn in the oil sector in at least three decades, BP reduced its capital spending three times in 2015 to $19 billion, slashed nearly 10 percent of its workforce of about 80,000 and sharply lowered costs.

BP slipped to its biggest annual loss last year as a result of lower oil prices, costs related to the settlement of a deadly 2010 Gulf of Mexico oil spill and huge writedowns.

BP's first-quarter underlying replacement cost profit, its definition of net income, was $532 million, down from $2.6 billion a year earlier but beating forecasts for a loss of $140 million, according to consensus figures provided by BP.

It said 2017 cash costs will be $7 billion lower than for 2014.

BP's current total charge for the Gulf of Mexico oil spill has risen to $56.4 billion after an additional payment of $917 million in the first quarter outside a settlement reached last year, it added.

BP is the first oil major to reveal the financial impact of record-low oil prices in the first quarter, closely followed by peers Total, Statoil and Eni later this week and Shell on May 4.

BP's refining and trading segment, known as downstream, once again came to the rescue with a quarterly profit of $1.8 billion, offsetting a $747 million loss in oil and gas production.

BP maintained its dividend at 10 cents per ordinary share.

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