BP chief executive Bob Dudley has voiced hopes the oil market will be in better balance by the year end as the company hailed the progress it has made off Shetland amid the crude price plunge.

The oil and gas giant lost $485m (£330m) in the first quarter on the standard replacement cost measure as it grappled with the effects of the sharp fall in the oil price since 2014 and the fallout from the Gulf of Mexico spill.

BP made $2.1bn profit in the first quarter last year, although it went on to post an annual loss of $5.2bn for the year, its biggest in 20 years.

The company suffered a stinging backlash from investors earlier this month when shareholders voted to reject the firm’s remuneration report for last year, which included a $19.6m pay deal for Mr Dudley.

The first quarter loss reflects the impact of the renewed fall in crude prices to a low of $27 per barrel in January.

The fall in the oil price from $115/bbl in June 2014 has taken a heavy toll on the North Sea where firms have slashed investment and cut thousands of jobs.

In January BP confirmed plans to shed around 600 jobs from its North Sea operations over the next two years in response to ‘toughening conditions’.

However Mr Dudley noted signs that conditions will improve following cuts in spending on new projects by oil and gas firms around the world.

“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,” he said.

Oil has regained some ground in recent weeks amid hopes that major producers would start to curb production to support prices.

Directors are trying to get BP in shape to be able to make good returns at $50/bbl to $55/bbl.

Mr Dudley said BP had made good progress in the first quarter during which efforts to reset costs had achieved considerable momentum.

He said development of the next wave of material oil and gas production projects that will underpin future profits is well on track.

BP included the Clair Ridge and Schiehallion, or Quad 204, developments West of Shetland in a list of key projects scheduled to start up over the next two years.

However the company has been cutting its exposure to mature North Sea fields in recent years. It has sold a range of assets deemed non- core to help meet the costs of the 2010 Gulf of Mexico spill.

These increased by $900m in the first quarter, taking the total to $56.4bn.

The job cuts announced in January will see the number of people working for BP in the North Sea fall by 20 per cent, to around 2,400 from 3,000 in coming months.

Stripping out the effect of one-offs BP made $532m profit in the first quarter, down 79 per cent from $2.58bn a year earlier.

Analysts had expected losses of $140m.

BP benefited from a strong performance by its refining business, which has profited from the fall in the costs of crude its biggest input.

Signalling confidence, BP held the first quarter dividend at 10 cents per share.

Steve Clayton, head of equity research at Hargreaves Lansdown, said: “It looks like BP is betting on a rapid return to significantly higher oil prices. If they duly appear, then BP will have protected its shareholders through the tough times. But if oil does not rebound, then BP will become progressively weaker in an environment where strength matters.”

BP got an average $26.97/bbl for its oil in the quarter, down from $46.79/bbl last time.

Production averaged 2.4 million barrels oil equivalent daily, up 5.2 per cent on the first quarter of 2015.

Shares in BP closed up 4 per cent, 15.55p, at 375.9p.