- Summary:
- As BP share price continues to recover from near 15-month lows, it presents investors with an attractive value proposition.
BP share price extended its upside for the fourth successive session on Tuesday, continuing with its recovery after disappointing third quarter earnings results. BP (LSE: BP.) was up by 0.7 percent and traded at GBX 385 at the time of writing. The stock declined to near 15-month lows last week after the company reported a revenue decline of $47.2 billion, down by 10.5 percent year-over-year and missed median EPS forecasts by 82.3 percent.
The share price recovery reflects the newfound upside momentum by global crude oil prices, affirming an upward momentum in recent days. Crude oil prices have declined by 2.7 percent in the last month, but have recovered some ground in the last five days to gain about 6.5 percent. BP’s third quarter earnings were the worst since the Covid 19 pandemic era four years ago.
Oil price is likely to rise, with a late hurricane in the Gulf of Mexico expected to cut off as much as 4.9 million barrels per day from the supply side. Also, the supply-side adds to the upside propulsion, after OPEC+ decided to extend its 2.2 million barrels per day through December. The oil cartel was due to raise production by 180k bpd, but low demand has adversely affected oil prices, necessitating the delay.
However, despite its troubled run, BP presents attractive value proposition. The company’s share buyback program targets to scoop £14 billion worth of shares by 2025, and that could provide significant upward momentum. Also, China’s economy is showing signs of recovery, going by ite recent PMI data. That could boost the demand for crude oil and help spur BP share price.
BP share price prediction
On the chart below, BP share price is likely to stay on the upside with action above 383.40. That could propel the price higher to encounter the first resistance at 385.10. However, a stronger upward momentum could break above that level to test 386.25.
Alternatively, moving below 383.40 will signal a shift to the downside, with initial support likely to be at 381.85. However, if the sellers extend their control, it could break below that level and invalidate the upside narrative. Also, the downside could extend to test 380.25.
