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BP share price forecast as crude oil retreats

By:
on Nov 22, 2022
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  • BP stock price has held steady in the past few months.
  • The shares have surged by more than 42% this year
  • Crude oil prices have pulled back in the past few days.

BP (LON: BP) share price has been in a strong bullish trend as demand for oil and gas stocks rise. The shares rose to 483p, which was a few points below the year-to-date high of 505p. They have jumped by more than 40% this year.

Crude oil price performance

BP stock price has had a strong rally in 2022 because of the strong financial results. This performance has been helped by the relatively high oil and gas prices and strong demand internationally.

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The most recent results showed that the company’s business was doing well. Its underlying earnings rose to more than $8.2 billion while its operating cash flow rose to $8.3 billion. The firm also reduced its total debt to $22 billion. 

In its statement, the company said that its average oil price was $101 per barrel, down from $114 in the second quarter. Refining global margins declined to about $35.50 per barrel. 

BP has also boosted its clean energy investments. It acquired Archea Energy, a company that produces biogas company and continued its investments in EV charging solutions. It acquired Archea for $3.3 billion in cash and assumed $800 million in debt.

Some analysts have questioned the acquisition. For one. Archea was trading at 20 times its 2023 EBITDA, which is not cheap. 

Another risk for BP is that crude oil and gas prices are falling. Brent, the global oil benchmark, has crashed by more than 36% from its highest point this year. It was trading at $88 and technicals suggest that prices could keep falling in the near term. Natural gas prices have also retreated in the past few months.

A possible catalyst for the BP share price is its strong share buybacks and dividend. The firm has committed to returning 60% of its surplus to shareholders through buybacks. It has already repurchased $8 billion worth of stock this year and is on track to reduce its debt.

BP share price forecast

bp share price
BP stock chart by TradingView

The daily chart shows that the BP stock price has been in a strong bullish trend in the past few months. It has moved above the 50-day moving average. At the same time, the stock has moved above the ascending trendline shown in blue. 

The stock has also retested the key support level at 457p. Therefore, the stock will likely continue rising as buyers target the key resistance at 505p, which was the highest point this year.