Royal Dutch Shell beat analysts' forecasts by reporting record third-quarter profits yesterday, as high oil prices more than compensated for losses due to US hurricanes.

The world's third-largest listed oil firm by market capitalisation said in a statement its current cost of supply (CCS) net profit, which strips out gains from rises in the value of fuel inventories, rose 68 per cent to £4.123 billion.

Excluding a gain of $1.569 billion from one-off items, mainly related to the sale of an interest in Dutch gas distributor Gasunie, Shell's "clean" CCS earnings were $5.8 billion.

A Reuters poll of 10 analysts gave an average forecast of $5.12 billion for Shell's clean CCS profit, with a range of $4.7-$5.8 billion.

Investors and analysts focus on the clean CCS figure, considering it the best measure of Shell's underlying health. The results boosted Shell's shares. The firm's London-listed "A" shares traded up 1.8 per cent at 1,722 pence at 8:43 a.m., compared to a 0.4 per cent drop in the DJ Stoxx European oil and gas sector index. "CCS is much better than expected ... We are positively surprised that the impact of hurricane costs is lower than anticipated," Margarita Shevtsova, analyst at Bank Oyens & van Eeghen said.

Hurricane Katrina slammed into Louisiana and Mississippi on August 29 with deadly winds and flooding that affected Shell's crude oil and natural gas production in the Gulf of Mexico as well as its local refineries and gasoline marketing operations.

Shell ranks as one of the largest producers in the Gulf of Mexico.

Shell said total upstream and downstream hurricane costs would be around $350 million in 2005 and 2006 and indicated a significant portion of these costs could be recovered from external insurers. The Anglo-Dutch firm added it was bringing shut production in the Gulf of Mexico back on line quicker than earlier expected.