BP Share Price Still in a Tight Range After Earnings; Shell is Next

Summary:

In this article, we write why the BP share price is still in a tight range after the company published strong earnings earlier today

The BP share price surged by more than 2% after the company reported strong quarterly earnings. It rose to a high of 307p and then retreated to the current 301p. In the same period, the Royal Dutch Shell share price dropped ahead of its earnings scheduled for this week.

What happened: As we wrote yesterday, several FTSE companies are releasing their quarterly results this week. Some of the key names to watch are Shell, NatWest, HSBC, and Barclays. In its results today, BP said that its underlying replacement cost profit rose to $2.6 billion, which was better than the $791 million that it made in the same period of 2020. The results were also better than the expected $1.4 billion.

This performance was driven by the company’s secretive trading operations and higher prices. Further, the company said that it reduced its total debt by $5.6 billion to $33.3 billion. That was a better performance than its earlier goal of dropping this debt to $35 billion. As a result, as we reported a few weeks ago, the company plans to restart its buybacks. In the second quarter, it expects to buy back stocks worth more than $500 million.

Attention now turns to Royal Dutch Shell, the other London-listed supermajor that will publish its results later this week. Shell has been underperformed BP substantially this year. While BP shares have risen by 18% this year, Shell’s stock has risen by just 4%. This is mostly because BP has explained itself to the market better than Shell. It has set clear goals on reducing emissions and returning to dividends.

BP and Shell share price YTD performance

BP share price prediction

Looking at the daily chart below, we see that the BP share price has been in a consolidation mode recently. This has seen it form a small narrow channel that is shown in black. Today, even after the strong earnings, BP shares struggled moving above the upper side of this channel.

Another fact is that the shares have formed a head and shoulders pattern, which is usually a bearish factor. Therefore, in my view, we could soon a bearish breakout. This will be confirmed if the stock moves below the support at 290p.