Bp Share Price Forecast: More Pain Ahead Expected

Summary:

In this BP share price forecast, we explain why the stock will likely experience more pain ahead in the near term even as oil price rises

The BP share price is struggling even as crude oil price remains at the highest level in more than three years. The stock is trading at 304p, which is about 9.45% below the highest level this week. Similarly, the Royal Dutch Shell share price has dropped by 8% from its YTD high.

BP news. BP and other European oil supermajors like Total have underperformed their American peers. For example, the ExxonMobil and Chevron stock prices are hovering near its highest point in February 2020. In the past 12 months, the BP share price has barely moved while the Vanguard Energy ETF has risen by more than 50%.

This underperformance has happened at a good time for BP and oil companies. For one, oil prices have risen from subzero to more than $70. This has helped BP to boost its free cash flow and boost its balance sheet. At the same time, the Covid pandemic pushed the company to make important cost reduction decisions such as exiting its unprofitable businesses.

The BP stock price has likely struggled because of activist pressure on its fossil fuel business. The company has been forced to invest billions of its free cash flow in its clean energy business. It is unclear how profitable some of these actions will be.

The most recent BP news is that the company said that it will buy the remaining part of its Thorntons joint venture. This is part of its push to expand its US fuels and retail business.

Analysts have mixed opinion about the BP share price. In a recent note, analysts at HSBC slashed their estimate of the stock from 380p to 360p. This is still substantially higher than where it is today. Further, analysts at Barclays, JP Morgan, and JP Morgan have boosted their targets to more than 400p. Those at Berenberg expect it to fall to 285p.

BP share price forecast

The Boohoo share price UK is not doing well On the daily chart, we see that the stock recently made a bearish breakout below the lower support line shown in blue. This support was part of the overall rising wedge pattern. The stock has even moved below the 25-day and 50-day moving averages. It also seems to be forming a head and shoulders pattern.

Therefore, the stock will likely keep falling as investors target 290p. On the flip side, a move above the resistance at 320p will invalidate the bearish view.