BP ticks higher ahead of meeting with President Obama

Shares in BP were bouncing off yesterday's lows ahead of a key meeting with President Obama this afternoon, as the company said it will ensure claims are paid in a timely manner.

At 08.49am, BP shares were up 4p, or 1.17%, at 346p. Shares fell 3.78% yesterday.

Reports suggest the group has refused to agree to US government demands to put cash into an escrow account.

BP said in a statement this morning it will discuss arrangements to ensure claims for the oil spill are paid in a fair and timely manner.

That offered some relief after recent worries the oil giant could be forced to suspend its dividend if it bowed to demands to hand over $20 billion.

Credit ratings agency Fitch said yesterday that that figure is more cash than BP has in the bank and has access to via borrowing agreements.

There are also worries that if BP does agree to put the money aside the cash will be lost forever, and in any case the move would not provide the certainty shareholders and the company need that it had drawn a line under the affair. Some suggest there is a chance that whatever they set aside now there could be further demands at a later stage.

Obama has said if BP does not agree, he will force the company's hand.

Lucy Haskins, analyst at Barclays, said if BP were to hand over the cash its debt ratio would rise to 27% - at the higher end of its 20-30% target range and would suggest the suspension of the dividend until at least the end of the year.

Yesterday, the US premier addressed the nation about the spill in the Gulf of Mexico, saying it is the worst environmental disaster America has ever faced.

'Unlike an earthquake or a hurricane, it is not a single event that does its damage in a matter of minutes or days,' he said, adding it will take years to clean up.

And while lawmakers are now calling on the US government to lift the ban on drilling in the Gulf of Mexico, there seems to be little light at the end of the tunnel for BP as a number of commentators suggest the group may have to sell or hand over some assets in the Gulf of Mexico.