BP’s share price has staged a strong recovery this year, rising from a low of 445.10p in July to its current level of 596.5p. This rebound has coincided with the ongoing surge in crude oil prices, as investors also await the unveiling of a new strategy by CEO Meg O’Neill. Technical analysis suggests that the stock has further upside potential in the near term.
BP stock jumps as crude oil prices soar
BP PLC stock has jumped in the past few months, helped by the ongoing crude oil recovery. Brent, the global benchmark, has soared to $105 from the July low of $70. Similarly, the West Texas Intermediate (WTI) rose to $93, also much higher than the July low of $67.17.
Crude oil prices have jumped because of the ongoing crisis in the Middle East that may get worse in the coming weeks. Saudi Arabia and Houthis have intensified their attacks, while Iran’s IRGC has launched attacks against tens of tankers crossing the Strait of Hormuz recently.
Russia and Ukraine have also intensified their fighting this month, even as Trump has put pressure on the two sides to avoid strikes on energy infrastructure. It is estimated that Ukraine has destroyed over 50% of Russia’s refineries.
The ongoing oil price surge is working well for BP. Its last earnings report showed that the underlying replacement cost profit jumped to $5.7 billion in the second quarter from $3.2 billion in Q1. Its operating cash flow jumped to $10.9 billion from the previous $2.9 billion.
The financial situation has helped BP to execute its strategy well. This includes implementing strategies meant to simplify its operations, strengthen its balance sheet, drive operational excellence, and invest in areas with maximum profits.
For example, BP has announced a portfolio simplification process aimed at generating over $20 billion in resources. It sold a 655 stake in Castrol Lubricants to Stonepeak Partners. At the same time, it sold its bp Wind Energy business in the US and its non-controlling interests in US onshore midstream businesses.
The company is now planning to share more details about its strategy in December this year. This will be important as it will let Meg O’Neill, the CEO, to give her priorities about the company’s future.
Analysts maintain a highly bullish outlook for the BP stock. Barclays recently reiterated its overweight rating, while Mizuho hiked the rating to outperform. Other analysts with a bullish outlook are Citigroup, Needham, and UBS Group.
BP share price technical analysis
BP stock chart | Source: TradingView
The daily chart shows that BP shares have been in a strong upward trend after bottoming at 445p in July. It recently soared above the important resistance level of 582p, its highest point on September 16 this year. Moving above that level invalidated the risky double-top pattern.
The stock has now moved slightly above the crucial resistance level of 595p, its highest point in March. It has remained above all moving averages, a sign that bulls are in control.
The Relative Strength Index (RSI) and other oscillators like the MACD and the Stochastic Oscillator have continued rising. Therefore, the most likely scenario is where the stock continues rising, with the next key target to watch being at 650p.
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