British Petroleum

Monday, 20th March 2017 15:38 - by Rajan Dhall

Price has moved higher since the OPEC output cut deal was announced and all the Iraqi, Saudi and Russian rhetoric in the mean time has not helped anyone (The reason for the recent retacement). The key is how do you tell how much countries are producing and when. All the statistics seem to be manipulated and I don't even think each country know how much oil they pump out of the ground. 

Oil bounced off lows last week and looks to be moving higher or trying to consolidate. One thing to remember about oil, it is heavily impacted by the strength of the USD. Each morning when I start doing my analysis I look for the price of oil and where the USD is. If the USD is weak and oil is firm we can assume that the energy sector is going to perform well. This sounds obvious but its amazing how many analysts forget the basics. 

The reason why I am bullish on this stock. 

OPEC and Non-OPEC nations are expected to come toward another deal at the end of next month. None of these countries and companies want an oil price below USD 50bbl. From a technical perspective, the price is in an uptrend and looks like it has rejected the pullback at the 440 area. The 465 level will be important this week and is the reason why I have attached the oil chart above. Spot oil has just rejected a downside move and will either look to consolidate or move higher. This could be the catalyst for the companies share to move to break that resistance level too. Other than this the fundamentals look good too, the company has consolidated its position after the oil spill disasters and also cut back on its work force during the major fall in oil prices and for me looks to be in prime position to take advantage of any new deal is announced.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.