- Summary:
- BP share price has been on a good run in the last two weeks but declined sharply on Tuesday. Here's why I think that's temporary.
BP share price declined on Tuesday, trading at GBX 413 at the time of writing after going down by 1.9 percent. The decline snaps a two-week gaining streak founded on escalating conflict in oil-producing Middle East. BP share price had recently returned to the upside after a prolonged decline that was underpinned by concerns over slowing demand for oil.
Despite its good run in the last two weeks, the BP share price sentiment is relatively week, as it remains -11 percent year-to-date. However, rising hostilities among Israel, Iran and Hezbollah have given the stock a lifeline, with oil prices recording their best weekly performance in over a year last week.
This week, Reuters announced that BP had abandoned its plans to cut output by the year 2030 as part of its transition to renewables. The company had originally announced in 2020 that it targeted to slash output by 40 percent, which it later scaled down to 25 percent in 2023. However, under the leadership of new CEO Murray Auchincloss, the company has decided to walk away from that plan.
The u-turn on renewables will certainly upset a significant number of climate-conscious investors, but it augurs well for those who are keen on near-term profits. Meanwhile, the demand outlook for oil could take a beating following China reluctance to announce additional stimulus spendin. This will keep BP share price under pressure in the near-term.
BP share price forecast
BP share price has found its pivot at 417.30, and the downside will prevail if resistance persists at that level. With that, the first support could come at 402.50. However, extended bearishness could breach that support to establish the second support at 402.50.
Alternatively, a move above 417.30 will favour the buyers to take control. In that case, the first resistance could come at 423.35. However, if the momentum strengthens further, it could extend gains to break above that barrier and invalidate the downside narrative. Also, it could lead to more gains to test 427.75.
