British oil major BP’s earnings were up in the final three months of last year but not by as much as industry analysts had expected.

The rise came from higher oil prices as BP said it cost more to refine the crude it produced. It also warned that output will be “slightly lower” this year.

BP also managed to achieve 2.8 billion euros worth of savings last year but is unlikely to repeat that as it faces rising operating costs in 2010.

Net income tracked oil prices higher last year until the fourth quarter.

Because BP did far better than anticipated in the third quarter investors had high expectations and were disappointed at how 2009 ended.

As a result the company’s shares fell four percent on Tuesday.

Its output in the final quarter was up three percent compared with the same period in 2008 and for the whole year production improved by four percent.

That was due to start ups in new oil fields in the Gulf of Mexico and because there were fewer hurricanes in that area last year.

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