Exxon has made the highest annual profit yet by a US company

Exxon Mobil, the world's largest oil company, has posted a sharp fall in quarterly profits after the price of oil slumped at the end of last year.

Profit for the final three months of 2008 fell to $7.8bn (£5.4bn), down 33% on the same period a year ago.

Profits for the full year hit $45.2bn, up from $40.6bn in 2007, breaking Exxon's own record for the biggest annual profit for a US company.

Rival Chevron saw fourth quarter profits rise slightly to $4.9bn.

For the full year, it posted profits of $23.9bn, up from $18.7bn in 2007.

The strong annual results can be attributed to a surge in the price of oil during the first half of the year.

Oil peaked at $147 a barrel in July, but by the year end, the price had fallen to below $50, a fact which hit fourth-quarter profits.

"The results speak for themselves. I still think Exxon is a low cost producer and at some point the price of oil will increase. They are doing all the right things now," said Fred Burke a Johnstone Lemon Asset Management.

On Thursday, European oil giant Royal Dutch Shell posted annual profits for 2008 of $31.4bn, a record for a European company.