The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
BP (Q3 earnings 31 October)
As oil prices rally, the future looks much more encouraging for BP. Having kept its dividend in place, despite fears to the contrary, the firm is expected to report a good set of numbers. It continues to focus on natural gas and oil in regions where it already has operations. At 18 times forward earnings, the stock is not cheap, relative to its five-year average of 13, but the brighter outlook for crude prices will help support both the outlook and the dividend. Having cut costs aggressively in the tough times, the firm looks like a leaner operation, with the potential for the big five oil firms to bring in $50 billion in earnings in 2017, the highest level since 2014. Three years ago oil was at $110, so with Brent now at $60 the turnaround in profit is a testament to how well these firms have done in recent years.
The shares are now testing the £5.00 area, the high from autumn last year. Above here the December 2016 to January 2017 peak at £5.21 comes into play. Significant support this year has been found at 440p, while the summer highs of 480p could provide some support in the event of a move lower.