BP Stock Crashes, Prints 20-Year Low On Oil Prices Collapse

Shares of BP (LON:BP) gapped 28% lower this morning in London on the biggest oil price crisis witnessed in recent years. The price opened at 282.05p, the lowest stock traded since 1999.

Fundamental analysis: Oil prices collapse on coronavirus fears, Saudi Arabia - Russia price war

The collapse in the BP stock price comes as no surprise given that the crude oil prices printed levels below the $28 mark to hit a new 4-year low. As a result, shares of all major oil producers around the world crashed lower.

OPEC+ talks collapsed on Friday after Russia rejected proposals for deeper cuts in production by 1.5 million barrels per day. Saudia Arabia, a major player within OPEC, responded by ramping up production to more than 10 million barrels per day in addition to a new price list for April, which is based on steep discounts for customers in Europe and United States.

Oil prices started falling in mid-January on the first coronavirus death cases reported in China, as investors start to price in global economic slowdown in 2020.

Technical analysis: Multi-decade lows

Stephen Innes, chief market strategist at AxiCorp, said today that investors are “shell shocked" and describing the panic as "complete pandemonium".

It is a realistic statement given that shares of BP, for example, opened 28% lower compared to the Friday close. This morning’s open at 282.05p is also the lowest the stock has traded since 1999, while the last time shares of BP traded below the 300p mark was in 2010.

As seen in the monthly chart, BP lost more than 50% of its market value compared to the period 16 months ago when the stock traded above 600p.

The next support is located around 260p, while the record low sits at 203p. On the upside, the bulls need a close above 370p to get back in the game.

It’s needless to add that you should stay away from the stock until the market gets better.

Summary

Shares of BP gapped 28% lower this morning as oil prices crashed over the weekend. Investors were disappointed that OPEC and its allies couldn’t reach an agreement on Wednesday, a situation that got much worse after Saudi Arabia’s plans to punish other oil producers leaked over the weekend.