Stefan Bernstein explains how the EU/Greenland critical raw materials partnership benefits GreenRoc. Watch the full video here.
Post results and presentation analysts (issued notes this AM) targets unchanged.
Goldman - 710
RBC - 650
UBS - 630
Perhaps a good entry point once the dust has settled.
Like others I was happy that the results beat even the highest analyst expectation ... 1.66 vs 1.63 (highest). A tad surprised at the SP reaction. The only niggle I see is the macro forward outlook with reduced output, but this is just in my view cautionary. Perhaps some had hoped for a snippet relating to discussions with other parties or even reviewing UK listing. Still once the dust clears this might be seen as a trading opportunity as volumes are not massive so my take is that the MM's are just being cautionary. We will know more by the end of the week. Nothing to worry about from me.
Crude oil inventories in the United fell this week by 2.675 million barrels, the American Petroleum Institute (API) data showed late on today.
This week, SPR inventory dropped for the third week in a row losing another 1.6 million barrels for the week to reach 368 million barrels—the lowest amount of crude oil in the SPR since October 1983.
Gasoline inventories fell also, by 1 million barrels after building in the week prior by 450,000 barrels.
Distillate inventories fell by 1.9 million barrels after decreasing by 1.98 million barrels in the week prior.
Rounding out the inventory losses, inventories at Cushing, Oklahoma, decreased by 600,000 barrels—after falling 1.36 million barrels last week.
The phrase 'it's going to blow any time soon capt'n' by Scottie to Captain Kirk springs to mind. Perhaps weeks or months either way the trajectory for oil and products shows more demand than supply going forwards. Interesting times.
All is aligning nicely for a spike up in oil prices.
No SPR refill until July at earliest... well that will not happen anytime soon given prices, still a good backstop though.
There will also be scratching of heads as URALS exceed the cap which might constrain supply further.
Russia doing its bit as March reduction in supply in excess of 700K / day.
Spot prices ratcheting up for June delivery.
As noted holder of oil paper moving bullish aligning with physical (OPEC burnt a few fingers as per last output to year end reduction announcement)
China's March crude oil imports surge 22.5% from year earlier.
I reckon the POO Brent will exceed $100 qtr3 and continue to rise. What we have to realise is if you factor in inflation to POO then $120 should not impact demand (and of course help with the competitiveness of renewable electricity). Nice to see that BP has fingers in all the pies as reported of late..... and of course a substantial acreage in the US Permian :-) Barring world events upsetting the applecart I do think £6 ++ is nailed on for this year.
There seems to me that the paper oil market is slowly been overcome by the actual physical oil market. When the paper market realigns I would expect the oil price to better reflect actual supply and demand. I would say that once the trajectory of Asian demand is clear this should happen and if this is as is forecast by Goldman Sachs then we should see a jolt up in the price of oil. By my reckoning this should be in the next month, say end May at the latest. All imo. Just I get the feeling that prices will suddenly shift north.
Russian Urals Breaks Past $60 Price Cap Thanks To OPEC+ according to media reports. I suspect this will start to be interesting in a month if prices firm as the Price Cap will work or it won't. I suspect the latter as those Russian's are smart traders. Also BP has a broker upgrade to 630 (Credit Suisse though)... still worth a note.
There will be a lot of monies moved into ISA's soon and the energy sector is looking positive at the moment. I will be one of them as I have a dealing account that with the cap gains and divi changes means I need to rejig my monies early door's 2023 tax year. Next year will be even worse. Seems to me that our government is more liberal than conservative these days.
I did think circa 400K reduction, and my reading of late is that the markets had priced in no change at all. So this I suspect is equivalent to a doubling of the 2MBO to 4MBO output reduction when you take into account the vagaries of adherence to output then this will definitely move the market and I think should see the POO rise significantly from this level.
My take is that the oil producers have seen in the past that there has been no demand destruction up to the heights of $120 and taking into effect global inflation the price of building that new Saudi city from the desert must have risen significantly and they need the money. As they control supply looks to me like they will get it. As BP share holders it looks like we will be the beneficiaries. Eyes down 8am tomorrow.
Great news and my 'tea leaf' target of mid 600's looks achievable this year.
Did anyone else notice the very large buys late on today… reported around the uncrossed trade. This bodes well.
Also I see that the UK 10 year treasuries are now less attractive than their US counterpart and there has been a crossover in pricing of late. This might put the £ under some pressure assuming this does not reverse.
Lots of good news around BP of late. It’s now or never imo for an approach by a US peer. Either way which way holders are in a reasonable place.
This article is interesting. The rig is a good place to house all the equipment required to produce green hydrogen.
I suspect the next potential pivot point in the POO is the OPEC meeting early April as there is an excuse now to trim output with rising stocks of crude.
Adding up from an article today in oil price nearly 1MBO of refinery capacity is offline now in France. I would expect diesel to start rising at the pumps soon as all that Russian diesel in storage (pre product cap) should start to run down. The draw from US stocks indicate to me that it is being shipped out as well as increased US draw, perhaps to the customers of the idle refineries in France. BP makes a fair bit from refining (especially jet fuel) and I have not seen BP mentioned in the published outages.
The API / EIA reports (tues/wed) next week should provide some pointers.
Looking at the 'Products' market we can see very large drawdowns across the water (EIA / API data this week). With the Russia 'Products' export ban and the de-stocking of storage there may be a problem down the line. Sure lots of crude in storage, the problem is the bottle neck with the refinary's . We may see OPEC reducing output by a smidgen on 3/4 as there is a buildup of crude worldwide, the problem is our need is for refined product. I see one analyst reckons $140 oil this year, I am not sure of that ; perhaps $100 come August. On balance BP sitting in a good place and should be heading to circa £5.50 soon.
I did notice on IG that nearly 90% of traders in 'paper' oil were long mid week. I would expect them to have taken quite a hit at the friday close. I reckon even the bright one's will have waited for the Credit Suisse matter to be resolved (it is being reported that a statement late Sunday should be expected). It could be that CS will be taken over and that will be the end of it with oil springing back (again paper speculator's). OPEC will meet the following week and might cut 400K due to oil storage (except US SPR being high). I hope that BP oil traders are making the most of this price action.
Will us holder's get this price at ISA top up time..... I suspect not.
One thing that makes me confident in BP is that at the end of the calendar year around 20% of shares would have been cancelled 22/23. Looking ahead with the notes re EBITA in the annual report I see no reason for an additional 10% of shares a year to be cancelled (assuming current POO is maintained). Having shares for more years than I like to admit I realised early doors I could not (sell / buy) short term but to buy and hold was safer for me. BP has affordable debt and a growing dividend. Sure there will be up's and down's but all things considered BP is not a bank but a 'cash machine'..... (bet he wishes he had not said that)...
ECB added 0.5% , they were in a bit of a bind and I think this was the right call. The message is no reason to change course due to recent events.... ie can accommodate issues to date. Over to the FED and BOE next week.
I do think the drop in oil has been over done and BP should find support on the 200MA. I saw a report this AM that BP were bringing forward the wild cat drill off Canada by a month. We should have results around July. This is a 5 Billion barrel prospect. An aside but I wonder if the SPR will look to capitalise on the POO and buy some ?..
Looks like all eyes on Credit Suisse at the moment. Ironic that it was the Saudi's decision that caused the rout in prices today. Not want to catch a falling knife so hands firmly clamped under the legs. Did think that it would hold around the £5 mark today. I was wrong there. Anyway I wonder if the US will try and buy for the SPR as they did say WTI $68 - $73 was the av. price they were looking for when buying back. I suspect we will know once it has happened. The EIA stats out today showing large draws in gasoline and distillates so the demand is still there in the US. Agree will posters that this will pass soon ... perhaps once the bankers sort themselves out. We may even have a pause from the Fed and BOE next week. I do think that all of these shenanigans will only exacerbate the supply crunch in oil second half 2023.
Must admit to be surprised to see sub 510 this AM. It might go lower, it might not though, still like most I am sitting on my hands and waiting for the dust to settle. I would expect it all should calm down prior to the end of the tax year. These thing happen and looking at the roads the traffic seems to be getting much busier..... demand for oil and products from what I read seems to be be growing so it seems to be just one of those cyclical down times on the SP front. Perhaps Exxon might after all make a play for BP. I suspect though a bid around £7 would imo make sense. Still that is in percentage terms a high bar. Chance of it happening is pretty low, finger in the air around 20%. Back to the SP the MA / RSI charts are approaching low levels so all things considered I would expect some support around the £5 level.
Looking across the pond and the goings on at SVB I am reminded how important it is that a company to not only park's their money in a safe place, but on the other side of the equation ensuring debt is structured so it is affordable. The problem with banks is that their model leverages cash and whilst interest rates are low they are protected from bad decisions to some extent. Now in the new 'higher interest rate environment' with more banks and leveraged companies juggling their debt we will see in the words of Warren Buffett who is 'wearing trunks when the tide goes out'.
Moving to BP (and oilers in general) their debt books imo are better than most of the market. Indeed the BP board might struggle soon if they have no need to buy assets as the rate this debt is priced at is very low. The Hybrid bonds I believe cannot be bought back for a couple of years. I see investor's looking more and more at company debt and importantly when it expires (need for refinance). I read today that Thames Water have such a problem looming. BP is at the opposite side of the scale imo in which long term debt is at very low rates and having the dilemma of what to do re retiring debt or perhaps changing the structure of shareholder reward.
All in all another positive metric and long term BP imo ticks more boxes than most.
The Electrolyser space is moving on at a great pace. Attached is over 6 months old but shows the potential leaps in green hydrogen production. UK PLC thinks it is getting all this extra electricity from the spinny things at sea. Perhaps other plans are afoot..... reckon the contract authors missed this one. Time will tell.
https://www.rechargenews.com/energy-transition/worlds-cheapest-green-hydrogen-start-up-with-ultra-efficient-electrolyser-to-develop-pilot-factory-after-securing-29m/2-1-1270403
Excellent article and puts into perspective BP's thought process re renewables, in particular wind and solar. For too long the 'spinny things' are redundant as the grid can not handle the output when the wind is strong. I like many look to the land base turbines only to see quite a few stopped, for long I assumed they were broken. I now know they are paid to keep them stopped. The article below looks at the technology for decoupling the turbines from the grid and producing green hydrogen. I feel this is the way BP will go as Hydrogen has a lot going for it imo.
https://ramboll.com/net-zero-explorers/articles/offshore-hydrogen-at-scale#:~:text=Hydrogen%20is%20produced%20offshore%20and%20transported%20to%20shore%20through%20a%20dedicated%20pipeline.&text=An%20electrolyser%20installed%20and%20fully,shore%20through%20a%20dedicated%20pipeline.
Must admit to be scrabbling around this PM when the SP tanked today to find out why. When I was able to see it was not a Bull squeeze and a report re OPEC ( agree some jurno's will be trading today) I bought a few more as OPEC are mostly bluster and will generally stick together as this supports prices. Anyway given all what is happening I am more than sure that the POO will spike mid year. Elections in the US next year so a bit of economic pumping across the pond. BP so undervalued ( as are other oilers ) so on balance the GS target is still the one I am looking at.
Believe a poster flagged this up a day or so ago. A little more detail posted below. I suspect as BP Lightsource appears now to be self funding then to invest in large pipeline projects cash has to be found.
Lightsource bp, the UK-based solar developer half owned by BP Plc (LON:BP), has put a roughly 1-GWp portfolio of solar projects in Australia up for sale, the Australian Financial Review reports.
A potential deal could be reportedly worth AUD 1 billion (USD 672.4m/EUR 635.3m).
According to the daily’s Street Talk column, Lightsource bp has hired Macquarie Capital to assist it with the sale of three solar parks in operation and two projects. Specifically, the portfolio on offer includes the 200-MWp Wellington and 107-MWp West Wyalong photovoltaic (PV) farms in New South Wales and the 210-MWp Woolooga park in Queensland, as well as the 425-MWp Wellington North and 90-MWp Wunghnu schemes, which are under construction.
A tender for the assets is planned to be held in April, with a binding offer phase seen to be entered in the middle of the year.
Macquarie’s pitch seen by Street Talk has shown that Lightsource bp could sell the solar farms and projects in full or keep a minority interest. It is also reported to be open to an option for running the assets under an operation and maintenance (O&M) agreement, depending on the deal’s progress.