BP and Shell fortunes diverge, while oil prices crash on trade fears
A mixed outlook for the oil market makes life difficult for UK oil titans BP and Shell but there are signs that BP may have a stronger set of foundations for further growth.
BP Q2 earnings beat expectations
At BP, second quarter (Q2) earnings were $2.8 billion, in line with the previous year but ahead of the forecast $2.5 billion. Production was up 7% to 2.6 million barrels per day. Divestments continue, with BP still on track to hit $5 billion in asset sales by the end of the year. The better figures have pointed towards the prospect of increased dividend payouts from the firm.
Shell posts underwhelming profits
Meanwhile, Shell suffered a 25% fall in profits to $3.5 billion, well below the forecast $5 billion. Like BP, it increased production, but blamed a weaker global economic outlook, plus a sharp drop in gas export prices, of which Shell is a key supplier.
Despite rising tensions between Iran and the US, oil prices have been hit hard by renewed trade tensions between the US and China. Hopes of a continued rally in oil prices have been dashed, with the price continuing to push lower after peaking above $65 at the end of April. Since then we have seen lower highs, as continued US shale production increases help limit any rise in the price.
BP and Shell shares: technical analysis
Despite rallying in the wake of its earnings, BP’s share price has gone nowhere over the past year. Rallies towards £5.80 have found resistance, and aside from the Q4 dip to 480p, weakness to £5.20 usually finds buyers.
By contrast, Shell has risen steadily over the past two years, from £19.00 in the summer of 2017 to over £26.00 at the beginning of August 2019. Weakness in July meant that a push to the 2018 high at £26.80 has been defeated for now, and the series of higher lows seen since the beginning of the year has been brought to an end. Further declines would challenge support at £23.34, £22.70 and then £21.92.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets