ExxonMobil reported a 63% slide in first quarter profits following low crude oil prices and weak refining margins. It reported a profit of $1.8bn (£1.24bn), a sharp decline from $4.94bn for the same period last year and its lowest quarterly profit since 1999.

Revenue dropped 28% to $48.7bn, but it had strong results from its petrochemicals division.

Rival Chevron faired even worse, with a quarterly net loss of $725m.

That compared with a net profit of $2.57bn for the same period in 2015 and was worse than analysts had expected.

John Watson, Chevron chief executive, said: “We are controlling our spend and getting key projects under construction online, which will boost revenue.”

Shares in ExxonMobil rose 1.4% in New York on Friday, while Chevron fell 0.6%.

Meanwhile, oil prices hit their highest levels of the year on Friday, driven up by lower US production and a weak dollar.

Brent crude was up 12 cents at $48.26 a barrel in afternoon trading, while US oil rose 57 cents to $46.60.

US oil production has continued to fall in recent months, easing concerns about oversupply, while the dollar has lost almost 2% of its value against other global currencies in the past week.

A weaker US dollar typically contributes to a rise in oil prices, because oil is priced in dollars. When the dollar weakens against other currencies, oil becomes cheaper to buy, pushing up demand.

Production rise

However, the latest rise in oil prices may be limited by a future increase in Middle East production, according to a note released by Deutsche Bank.

Iraq and the UAE are likely to raise production after maintenance issues are resolved, Deutsche indicated, and Saudi Arabia may also increase production significantly.

“A sustainable rise in Opec production may be just around the corner, and… the rally may pause,” Deutsche analysts said.

But this may be tempered by events in Latin America, where Venezuela is struggling to maintain its crude output, according to a report from Eurasia Group.

The organisation reported that low oil prices over the past two years have meant Venezuela’s government is running out of cash to keep its state-owned oil pumps operational.

Hamza Khan, senior commodity strategist at ING, said: “The issue is that we haven’t seen price rallies … correlate with fundamentals. The fundamentals – high stocks, high production – haven’t changed.”

Price dynamics

The oil price has fallen dramatically over the past two years since Brent crude hit a peak of $115 a barrel in June 2014.

One factor behind the fall has been slowing demand from China and other developing economies.

Supplies have also increased, most notably from new sources of US shale oil.

In addition, big producers such as Saudi Arabia have not reduced output to try to push up prices.

Earlier this month, a meeting of the world’s leading oil exporters failed to agree a cap on production.

Saudi Arabia appeared willing to freeze output only if all members of the Opec oil producers’ cartel agreed, including Iran.

But Iran maintained it would continue the increase in oil production it has followed since economic sanctions were lifted earlier this year.