BP's Burgeoning Share Price
BP Burgeoning share price - at www.moneyweek.com - the best of the international financial media
The media is now saying the oil price will climb up to $100 a barrel. But media frenzy can be a clear indication of a "market peak", says Lex in the FT. So does this mean BP investors should dump their stock?
Certainly not if yesterday's trading statement is anything to go by. The world's number two oil firm by market value said its second quarter production gained by 3.5% compared to the same time last year. Overall production was around 4.1m barrels of oil equivalent per day (boepd), compared to 3.97m boepd from April to June last year. Also the group is still making the most of high refining margins, as its complex refineries handle heavy crude better than its rivals, says Tom Bergin on Reuters.co.uk. What's more, the statement showed that BP had returned to growth in production outside of Russia.
So what are the problems plaguing the oil giant? For one, BP will have to pay an unspecified charge allegedly tens of millions of dollars following the death of 15 people at its refinery in Texas City. Also, BP's Russian business is currently suffering under higher taxes from the Russian authorities.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
But BP's share price remains inexpensive, says Lex. Valuation models show that BP's share price discounts a long-term Brent Crude price of some $34 a barrel. This is obviously well below the current oil price predictions. And if these forecasts prove true, the oil sector could be "one of the few attractive sectors in the equity market this winter".
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
Four AI ETFs to buy
Is now a good time to buy AI ETFs? We examine four AI ETFs that investors might want to add to their portfolio
By Dan McEvoy Published
-
Chase boosts easy-access interest rate - savers could earn 4.75%
Chase is offering a boosted interest rate which is fixed for six months, on top of the standard variable rate
By Jessica Sheldon Published