Fort Wayne – Circa August 2018: BP Retail Gas Station. BP is One of the World’s Leading Integrated Oil and Gas Companies IV

The BP share price is struggling. Shares of the giant supermajor dropped for the second consecutive day in London. They closed at 312p, down from the weekly high of 322p. The stock is up by more than 22% while that of Royal Dutch Shell has jumped by less than 10% year-to-date.

BP stock price at the New York Stock Exchange (NYSE) is at $26.

BP has been winning

From a fundamental perspective, BP has achieved a lot this year. Recently, the company reported relatively strong earnings. It made more than $2.5 billion in net profit, up from the previous quarter’s $115 billion and the $791 million that it made in the same quarter last year. The firm achieved that by cutting costs aggressively and because of the relatively higher demand as the economy rebounded. 

Most importantly, the company managed to slash its total debt at a faster pace than expected. In the quarter, it slashed its net debt by more than $5.6 billion to $33.6 billion. As a result, the company announced that it will start buying back shares at a faster rate than expected. The CEO told CNBC:

“It shows that it is possible to do two things at once. It is possible to deliver our shareholders with competitive cash returns and at the same time transition the company to a lower carbon future.”

Barclays analyst is extremely bullish

The strong performance by BP has pushed some analysts to up their target. One of them is Barclays’ senior oil and gas  analys, Lydia Rainforth. In an interview, she attributed her change of heart to the fact that BP has managed to turn itself from being an integrated energy company. 

It has achieved this by stating its clean energy goals and by investing aggressively in renewable energy. For example, the company acquired Chargemaster, the UK’s biggest EV charging company in 2018. The company also acquired Clean Energy Fuels in a $50 million deal. It also made a partnership with Equinor to develop offshore wind farms. 

She also attributed to the strong cash flows, higher dividend yield, and its strong balance sheet. She expects it to double its 5% dividend yield through buybacks. Further, she believes that while the upstream business is shrinking, its high grading and cost savings will help to offset this. She believes that the stock will more than double to $60. You can watch the interview below.

BP share price analysis

BP Share Price
BP share price chart

The weekly chart shows that the BP share price has been attempting to recover from its lowest level last year. The shares are trading at 312p, which is 64% above its lowest level last year. The shares have managed to move above the 78.6% Fibonacci retracement level. It has also formed an ascending rectangle pattern that is shown in orange. Also, it has moved above the 25-day and 50-day exponential moving averages (EMA). 

Therefore, there is a possibility that the stock will keep rising as the world’s economy recovers. If this happens, the next key level to watch will be 395p, which is along the 50% Fibonacci retracement level. It is also 27% above the current level. 

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