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Day, May 17th 2024
Crude prices continue to trend within a very narrow range, confined within $82 and $84 per barrel over the course of May, and despite this week’s improving macroeconomic outlook Brent futures continue to be rangebound. That said, a slight US oil inventory drop and US inflation slowing down to a monthly rate of 0.3% might provide support for a breakout next week.
ADNOC Eyes US Trading Expansion. ADNOC, the national oil company of the UAE, is planning to expand its operations into the US market by setting up a trading desk in the States while also looking for larger LNG exposure in the shale patch with ongoing talks on Rio Grande LNG.
Colombia Turns Off Pipeline Due to Theft. The chief executive of Colombia’s Ecopetrol (NYSE:EC) confirmed that the state-controlled oil firm would shut the Transandino oil pipeline running to Ecuador’s Pacific port of Tumaco until at least year-end, citing rampant theft.
Chevron to Quit UK North Sea. US oil major Chevron announced it would exit its UK offshore business in the North Sea, starting the process of selling its remaining assets in the area, claiming that its decision to quit is not related to the UK windfall tax on energy profits and a worsening political environment.
Brazil Fires Market-Friendly Petrobras CEO. The Brazilian government ousted the chief executive of the national oil firm Petrobras (NYSE:PBR) Jean Paul Prates, opting for the former ANP official Magda Chambriard, who is expected to cut the major’s dividend and push for lower fuel prices.
IEA Downgrades 2024 Crude Demand Outlook. The International Energy Agency lowered its crude oil demand forecast for 2024 by 140,000 b/d to 1.06 million b/d, half of OPEC’s 2.25 million b/d call for this year, citing poor industrial activity and weaker diesel consumption.
Poland Probes $400 Million Missing Payments. Prosecutors in Poland are investigating the trading arm of national oil company Orlen (WSE:PKN) as some $400 million went missing after Orlen Trading paid two Dubai-based intermediaries as prepayment for Venezuelan crude that never loaded.
Moscow Eyes Power of Siberia 2 Deal with China. Russia’s deputy PM Alexander Novak said that Moscow and Beijing should sign a supply deal on the Power of Siberia-2 gas pipeline very soon, even though Gazprom’s CEO has not accompanied Putin on his official visit to China.
Rains Alleviate Wildfire Fears Across Alberta. The threat of ravaging wildfires in Alberta’s Fort McMurray area, home to around 1 million b/d of oil sands production, subsided as two days of wet weather helped containment efforts, alleviating the risk of shutdowns for the time being.
Trafigura Warns of ‘Overdone’ Aluminium Rally. Global trading major Trafigura warned that aluminum prices should decline by at least 6% to a range of $2100-2400 per metric tonne over the next six months amidst higher supply and worsening global demand for the base metal.
From Sunny Carvei
Buff
''If you believe buybacks increase SP ''
The market determines the valuation of BP on a daily basis. Buybacks have ZERO impact on market valuation. If a market valuation remains constant, then the price for each share would increase determined by the decreased number of shares in issue.
In May 2021 there were about 20.24 Billion shares in issue with a share price of about £3 - Market cap about £61 Billion
Today there are about 16.75 Billion shares in issue with a share price of about £5. - market cap about £84 Billion.
So about a 17% reduction in share count and about a 37% increase in market cap.
From
your post is the same ballax as I have seen before on a few occasions .
fog.
you appear to have diverted away from buybacks giving an ''infinitesimally small'' increase to shareholders percentage ownership as clearly a 17% +
increase makes your statement look totally ludicrous.
Now you are simply making a whinge about buybacks - well TOUGH.
This is what shareholders gave permission for . You should learn to respect a majority vote.
I have also seen the whinging about buyback on a number of boards - it is pathetic. Any investor not liking them can invest elsewhere.
There are many metrics combined that would determine staff bonuses.
I am more than happy for eps to simply be one of those many, as I as a shareholder would greatly benefit from increases to the amount of money BP make for each share held.
Thanks fog, I tried to explain why buybacks are called 'financial engineering' benefitting BODs at the expense of investors. Without any work they raise EPS and collect their bonuses. If you believe buybacks increase SP then it should be way north of here. DYOR
" . . . If a company pays the same amount out towards dividends every year but buys back 10% of shares also in a year then the following year you will get a bigger dividend . . . "
Really? In 2019 the annual dividend was 32p ps. During the period from the end of 2019 to the end of 2023 BP have spent 22bn $ on buying back almost 4bn shares.
The result? A dividend in 2023 which needs to increase by a further 43% to get back to its 2019 level!
Hi Peter, post-pandemic annual dividends are still less than 2013-2019.
https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/investors/bp-cash-dividends-ordinary-shareholders.pdf
Also, see BP Directors' remuneration report as to why the BOD like buybacks, which in turn boost EPS:
"For the 2021-23 performance share awards, we will introduce an earnings per share growth measure".
... if I can just come in here, surely it must make a difference what happens to the bought back shares? Are they held in treasury, of cancelled.
20% cancelled shares wouldn't affect the value of the company at all, but certainly increase the value of the remaining (80%) shares.
Share buy backs to be held in treasury on the other hand just means that BP are a 20% larger shareholder in themselves & have basically swapped (and thereby reduced) cash for shares.
Or have I got that wrong too?
If a company pays the same amount out towards dividends every year but buys back 10% of shares also in a year then the following year you will get a bigger dividend as theres more money to share between less shares! So it does help…
And EPS is a huge factor of a company’s value on the market!
Fog, buffa - I agree with you. If 20% of the shares were bought back then that money has been lost from the "bank account" so the company is now worth 20% less than it was. Therefore the value of your share has not gone up, and the buy-back has done nothing for you. All it does is alter the metrics by which directors get their pay. You may own a bigger percentage of the company, but the company is a shrinking asset.
Let doubters look at it this way : when you have a 20% dividend you expect the share price to drop 20% on ex-div day. When you have a 20% buyback, does the share price increase 20%?
There should be a golden rule on stock forums - you can't use hindsight to back up your arguments. We'd all be rich if we had it.
Longtimeinvestor, you're dancing around the crux of the issue without succinctly addressing it. Explain how buybacks put more money into the pockets of retail investors? That's a rhetorical question of course, because they don't.
That's cute that you have a certificate framed in your toilet, proudly stating you own a greater % of BP's outstanding stock than a few years ago. But so what? How did that make you richer? If the BOD maintain a bias of more buybacks, rather than pay higher dividends, then who do you think it really benefits? Cui bono?
But talking of "clueless" and seeing as you're a "long time investor", or did you mean a long-term investor? Cast a glance at how much more money you would have made simply buying Chevron and Exxon over the last 20 years instead? It will make extremely painful reading...
Speaking from experience, the BP buyback cultists almost always turn out to be former employees. Objective global investors would not sing the praises of BP as a long-term investment; unless one only bought at pandemic lows it is self-evident why. Even UK institutions have been underweight BP, they correctly looked across the pond instead. That's why the share price is still languishing below pre-pandemic levels, or didn't you notice? The share price never even recovered from the Deepwater disaster, we had a clueless CEO back then too. Some things never change...
Fog
''infinitesimally small''
In May 2021 there were about 20.24 Billion shares in issue
Today there are about 16.75 Billion shares in issue.
A shareholder retaining the same amount of shares in that period would have seen their percentage ownership increase by over 17% and increasing each buyback day and you call that -''infinitesimally small''
You are CLUELESS
Fog
''What monetary benefit does this infinitesimally small change make to a retail investor's life?''
small? - once again think again.
as well as increasing a shareholders ownership by a good percentage,whilst buybacks are a preference , eps will increase, and thereby contributing towards further increases in dividends per share. At a point where the BOD's feel that share repurchases are not at such bargain levels and therefore suspend them, then at that point monies would be redirected to further increases in dividends . Buybacks are a great benefit at bargain price levels for shareholders staying for the longer term. If an investor does not like them then there are plenty of alternative investment options for them to pursue.
Fog
''why would a retail investor care about that infinitesimally small difference?''
? - you need a rethink
Buff
'' sold out at £5.10 recently because i can beat the divi yield easily with no risk''
why are you still here then - goodbye
Off topic apologies in advance.
Hi again Jeezoo
I have been on the receiving end of and utilised semi-truthful ways of delaying exchange of contracts or completion dates when it comes to my property sells or buys.
I certainly would not promote or condone such action but the legal system is as it is. No contract until exchange. No purchase until completion ( gambling with deposit )
I hope all your ducks line up at the appropriate time Jezzoo when you need your funds but if for whatever reason they do not some may suggest the dark arts of stalling.
Communication is key of course, you don't want to lose your bargain dream home but things do happen in life that can delay plans. Most sellers, I would guess ate amenable to some delay in the process and do not want to lose a buyer.
Maybe I'll leave it there before I exiled.
Buying or selling s property is immensely stressful and I hope you get your dream pad and, along with he wise meoryou, I'll be crossing everything and holding you in my prays and chants.
From the top of the mountain, i can see a wonder land just over the horizon.
Best
Mark
Hi MarkGo,
I didn't sell as TBH I think it will bounce back over £5 in the next week and maybe touch 5.20 IMHO.
Here's hoping on the the last roll of my particular dice !!
You're welcome Jeezoo
To be honest, I did not expect the share price to be where it currently is. I have however used the opportunity to top up again as I feel this is just another temporary drop. I've noted that the drops are maintained for a shorter period each time recently. Volumes are down which does not help and there are always unpredictable occurances and that can trigger selling. You can see oil is now bouncing up again after the dumping of 8 billion of oil futures contract last week, this caused the technical selling and subsequent price drop of oil. Nothing to do with supply or demand just on financial companies manipulating and skewing of markets.
My money where my mouth is, I expect a climb from here back to around the 510s within a week or two supported by large crude draws over the next few weeks. Consensus is that Opec+ will roll over the cuts at the beginning of June at the same time that the oil market will become very tight pushing oil and equities up further through the summer.
Nothing is certain of course as there are always unforeseeable unknowns but I hope I'm overly cautious on the share price to assist with your house purchase.
Good luck again with both.
Mark
Hi Jezzoo
Did you get any shares away above £5,or is it all one last roll of the dice.
Got everything crossed for you.
Thanks Mark, still hoping to see a bit of a rally, they haven't asked for the money yet !
Driftking27
In 1997 and 1999 there were 2:1 share splits.
I have no idea how these are accounted for ,but effectively 1 share became 4.( earning 4 times the div)
If you pick your dates from 2000 then this point is irrelevant
Harmonica, that's a real non sequitur.
If it wasn't clear the first time. I'll try again. What monetary benefit does this infinitesimally small change make to a retail investor's life?
Or do you simply derive personal satisfaction from knowing that now you own 0.0000000000000000000000001% (being generous there) more of BP's outstanding stock than you did a few years ago?
"And why would a retail investor care about that infinitesimally small difference?"
So NOW you are not arguing against buybacks in principle, but that they are NOT big enough for you!!
Make up your mind, please!
Https://oilprice.com/Latest-Energy-News/World-News/Chevron-Set-to-Exit-UK-North-Sea.html
Chevron, which has been active in the UK North Sea for more than 55 years, holds a 19.4% non-operated working interest in the Clair Field and associated assets—one of the largest oil and gas fields offshore the UK.