BP share price is down by more than 3.80% as traders worry about the new strain of coronavirus in the United Kingdom. Similarly, Shell share price has also crashed by 3.50%, making the two oil giants the worst-performers in the FTSE 100.
What’s happening: Shell and BP share prices have been on an upward trend in the past few weeks in part because of the new Covid vaccines. With the vaccine, investors believed that the price of crude oil would rise and boost the price of oil. Indeed, last week, Brent and West Texas Intermediate (WTI) reached their highest levels since Q1’20.
Today, BP and Shell shares have dropped sharply as more countries react to the new coronavirus strain. Countries like Germany, France, Saudi Arabia, and Kuwait have already banned travel to and from the UK. More countries, including the United States, could follow suit.
At the same time, the UK has also announced a new lockdown that will put brakes on the virus. All these issues will affect the demand for crude oil prices and pull Shell and BP share price down lower.
Further, Shell share price has dropped after the firm said that it would write-down further assets worth about $4.5 billion. This is in addition to the previously-announced $18 billion write-downs.
What next for BP share price: On the four-hour chart, we see that BP shares reached a multi-month high of 288p a few days ago. Since then, they have pulled back and are now trading at 258p. The stock has also formed a head and shoulders pattern, whose neckline is at around 250p. Therefore, we believe that the shares will attempt to fill the gap as worries of the new strain dissipate. This could see the price rise to above 270p this week.
What about Shell share price: A look at the four-hour chart shows that a pattern similar to that of BP has also formed. In the past few days, the shares have fallen from a high of 1,397p to today’s low of 1,280p. It has also formed a head and shoulders pattern. Therefore, I suspect that the shares will attempt to rebound in the next few days unless the virus situation gets worse.
