BP share price forecast: 600p target as technicals and oil align

BP's share price has continued its uptrend today, with investors betting on stronger profitability as energy costs rise. The stock jumped to 572p, its highest level since April 28 and 27% above its July low. With crude oil prices surging, this rally could well continue in the coming days.

Crude oil prices are soaring

BP and other energy stocks are in a strong upward trend as crude oil prices surge. Brent, the global benchmark, rose to $108, its highest level in months. West Texas Intermediate (WTI) crossed the important resistance of $100.

Oil prices rallied as the crisis in the Middle East escalated. Iran’s attack in Jordan destroyed some US planes, while Houthis captured a strategic Red Sea port city on Thursday. The group pushed out forces allied with the Yemeni government that is backed by Saudi Arabia.

Houthis have also launched attacks against key Saudi Arabian energy plants. These developments mean that oil prices may continue rising in the coming months.

Worse, there is a fear that Iran will bring an October Surprise, a major event that may help to topple Republicans in the upcoming midterm elections.

These developments are happening at a time when global oil inventories are at dangerous levels. This explains why analysts are now starting to boost their oil prices forecasts. Goldman Sachs analysts warned that prices may jump to $120 if the crisis escalates. Citigroup, on the other hand, said that prices may hit $150.

BP stock to benefit as oil prices jumps

BP and other energy companies are expected to benefit from the ongoing crude oil surge. The most recent results showed that its profit jumped to over $3.9 billion in the second quarter and to $7.75 billion in the year’s first half. This increase was because oil prices soared as the US-Iran conflict accelerated.

Its operating cash flow improved to $10.8 billion, which helped it to strengthen its balance sheet. At the same time, the new CEO, Meg O’Nell, continued the simplification process by selling its Gelsenkirchen refinery and its retail business in Austria. Most notably, the company decided to sell its North Sea business in the UK and Archea, its biogas business in the US.

Despite these developments, the company faced some major challenges, including in terms of its reliability. The closely watched upstream plant reliability was 92.4%, down from 95.7% in the same period last year.

BP stock chart | Source: TradingView

Technicals suggest that the BP stock price has more room to run. It has remained above all moving averages, a sign that bulls remain in control.

The stock has formed an inverted head-and-shoulders pattern, a common bullish reverse pattern. Also, the Relative Strength Index (RSI) and MACD indicators have continued rising.

Therefore, its technicals and fundamentals suggest that the stock may continue rising as bulls target the key resistance level at 594p. A move above that level will point to more gains, potentially to 600p.