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Where to next for BP shares as profits soar to 14-year highs?

Despite taking a $24 billion hit for exiting its Russian operations, BP still managed to raise its dividend and initiate a $350 billion share buyback programme.

(Video Transcript)

BP's profits soar as consumers feel the pinch

Oil giant, BP PLC has reported a profit of $8.45 billion - its highest profit line in 14-years. This comes at a time when consumers are feeling the pinch because of a rise in household bills.

Let's take a look at the numbers, which were showing that adjusted net profit came in $8.45 billion. We've been looking for something closer to $6.85 billion, after a figure last year of $2.8 billion.

Two years ago, of course, BP was in the real thick of it in massive losses. But this time, with all this money coming into the sector with high oil prices, BP's been able to increase its dividend by a margin of 10%. We'd been looking for something around about a 4% increase so that was better than expected as well.

Plus, the fact it plans a $3.5 billion share buyback plan indicates that the company thinks its shares remain cheap.

BP share price chart

Let's take a look at the share price chart, because you can see clearly the way in which it's risen since those lows two years ago, all the way down at 180-odd pence a share. Here we are now at 407.7.

We've just peeked above this line of prior resistance, which was established back on the 30th of June, and again you can see here on the 19th of April.

So it's going to be above that, albeit briefly, before a pullback back down to that level at 407.

Where to from here?

Well, obviously, there is an upward movement here. If you're looking at the possible topping out of a line, I think it's best to go with a Fibonacci on from the tops to the lows down there. And you can see that the 61.8% retracement kicks in at 418.9.

So technically, there is still further upside to go - something like around about 10 or 11 pence a share, and then you get into this area of resistance up to 433.1.

A total retracement would take us all the way back up to those highs not seen since the 8th of June 2022. A big question now is whether the oil is going to rise above that? We've seen oil under a little bit of pressure recently but there are a lot of comparisons about the size of these profits and the rate of which household energy bills are rising.

On the negative side, the company also had to take a $24.4 billion hit after ditching its near 20% stake in the Russian oil producer, Rosneft in response to the Ukraine war.

So, BP stock on the way up after earnings this morning.

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