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.

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".

Recommended

Donald Kendall: helping Pepsi win the cold war
People

Donald Kendall: helping Pepsi win the cold war

Donald Kendall was there to serve Nikita Khrushchev a Pepsi during a famous cold war détente with Richard Nixon. He went on to become a 20th-century m…
30 Oct 2020
Great frauds in history: Carlton Cushnie’s befuddling Ponzi scheme
People

Great frauds in history: Carlton Cushnie’s befuddling Ponzi scheme

Carlton Cushnie set up a finance company which was valued at an estimated £230m, but made only one trade finance loan in its existence, which actually…
28 Oct 2020
Craig Newmark: the nerd who shook up the media giants
People

Craig Newmark: the nerd who shook up the media giants

Twenty-five years ago, Craig Newmark lost his job at a brokerage and fired off an email to friends. That seeded a venture, Craigslist, that dominates …
26 Oct 2020
Great frauds in history: the Independent West Middlesex Fire and Life Assurance Company's early Ponzi scheme
Investment strategy

Great frauds in history: the Independent West Middlesex Fire and Life Assurance Company's early Ponzi scheme

The Independent West Middlesex Fire and Life Assurance Company (IWM) offered annuities and life insurance policies at rates that proved too good to be…
21 Oct 2020

Most Popular

The Bank of England should create a "Bitpound" digital currency and take the world by storm
Bitcoin

The Bank of England should create a "Bitpound" digital currency and take the world by storm

The Bank of England could win the race to create a respectable digital currency if it moves quickly, says Matthew Lynn.
18 Oct 2020
Don’t miss this bus: take a bet on National Express
Trading

Don’t miss this bus: take a bet on National Express

Bus operator National Express is cheap, robust and ideally placed to ride the recovery. Matthew Partridge explains how traders can play it.
19 Oct 2020
Three stocks that can cope with Covid-19
Share tips

Three stocks that can cope with Covid-19

Professional investor Zehrid Osmani of the Martin Currie Global Portfolio Trust, picks three stocks that he thinks should be able to weather the coron…
12 Oct 2020