Q1 operating profit beats forecasts;  shares jump more than 3 pct.

Norway's Statoil beat first-quarter earnings expectations on Wednesday and said the global oil market was approaching a balance between supply and demand, offering a glimpse of optimism on the crisis-stricken industry.

Cost-cutting helped the company beat analysts' forecasts, as its plan to slash $2.5 billion in costs on an annual basis from this year, and axe up to 19 percent of its workforce compared to at the height of the crude price boom, started to take effect.

Oil companies have slashed investments and jobs and cancelled some projects to cope with a 60 percent drop in the price of crude since mid-2014.

Statoil CEO Eldar Saetre, however, said the global market was rebalancing and he had become more optimistic over the past month.

"Whether it will be $80 (per barrel of Brent crude) in 2018, or sooner or later? That is uncertain. But we are confident on the direction towards a rise in prices," he said at the company's earnings presentation.

His comments echoed those of BP CEO Bob Dudley who said on Tuesday he expected crude prices to recover towards the end of the year. Oil hit its highest level this year on Wednesday, touching $46.8 a barrel, after rallying in the past few months.

Shares in Statoil, 67 percent owned by the Norwegian state, were up 3.7 percent by 0829 GMT, outperforming a 1 percent rise in the Oslo benchmark index. It was among the best-performing stocks in the Stoxx Europe 600 oil and gas index .

Although Statoil's first-quarter underlying operating earnings plunged 70 percent from a year ago to $857 million due to lower oil and gas prices, they were above expectations for $833 million in a Reuters poll of analysts.

Its core Norwegian business recorded a higher-than-expected profit in the first quarter, while its international unit posted a smaller loss than analysts had predicted, due to Statoil's cost-cutting scheme.

"We think the key takeaway of Statoil's results is success from their upstream cost reduction programmes which are driving better bottom-line results," brokerage firm Bernstein said in a note to clients. Bernstein has an Outperform rating on the stock.

"Both Upstream Norway and Upstream International did better than we estimated due to lower costs. Statoil is therefore following the trend of the European majors group i.e. opex reduction momentum, higher production, continued capex downside, and ultimately falling oil price break-evens."

Statoil said it increased its underlying production by 2 percent in the first quarter from a year earlier, after adjusting for divestments.

The Norwegian company has less exposure to refining than some oil majors, so has not benefited as much from rising refining margins as the oil price tumbled.

It said it would propose a first-quarter dividend of 22.01 U.S. cents in line with its own guidance to keep the dividend at this level for the first three quarters.

Like French peer Total, Statoil has proposed that shareholders could choose shares over cash as a dividend payment, a so-called scrip dividend. Total also maintained its dividend on Wednesday as it posted forecast-beating net profits.

Statoil also kept its capital spending target of $13 billion and a total exploration activity level of $2 billion this year. However, analysts from Pareto, Carnegie and Exane BNP Paribas said they expect capex to be lower than $13 billion this year.

By Stine Jacobsen and Ole Petter Skonnord