Chevron Corp, the second-largest US oil company, posted a 37 percent drop in quarterly profit, missing Wall Street forecasts, as steep losses at its refineries offset gains from higher oil prices and production. Global refining margins have suffered in recent months as rising crude oil prices have driven up costs even as the weak economy has shrunk demand for gasoline and diesel fuel.

That refinery weakness overshadowed Chevron's steep 9 percent rise in oil and gas output during the quarter from new and expanded projects, which lifted its proved reserves by 1.10 billion barrels. "It's like trying to go 40 miles per hour in a boat while dragging an anchor," said James Halloran, energy adviser at Financial America Securities in Cleveland.

Chevron's fourth-quarter net profit fell to $3.07 billion, or $1.53 per share, from $4.9 billion, or $2.44 per share, in the same quarter a year before. Overall revenue rose nearly 12 percent to $48 billion. Chevron said earlier in January that fourth-quarter profit would be hit by the slump in its refining business, which saw margins fall to the lowest levels of the year. ID:nN11169455 The company's business lost in the quarter versus a year-ago profit of $2.1 billion.

Copyright Reuters, 2010