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Marfthew,
Strongly agree. It seems way oversold by every measure, even if it falls further today dragged down by some general selling. Madness if it does, but nothing would surprise me in this climate.
I only wish I had more surplus funds to add. But I simply can't throw any more money at this market. Not unless I sell something else. So for me, nothing new planned & I'll continue to hold L/T with a mind to review things closer to the end of 2021. - GL.
As a consequence, best prepare for some sentiment-driven volatility across various sectors for a while. US futures selling off (it's dropped about 500 points as I write) & UKX may follow. If so, a typical overreaction.
But as we know, markets can be totally irrational at times with crowds all too easily losing their heads. Such is the market. - GLA.
Marfthew,
Various TA methods are in keeping with 222 as being close to an important support level here & not just because it was the intraday low in March. Certainly keeping at least above 220 seems key to avoid triggering yet more stop-losses & seeing even lower levels.
https://uk.investing.com/equities/bp-technical
No consolation that the entire oil sector is down again. That said, we know that all commodities tend to be cyclical, so this depression across the sector isn't be set in stone. Things bound to improve later. - GLA. I'm off out for the day.
Hi Thechancers,
Indeed, if they're selling just to sit in cash. But I suspect many are switching funds into other sectors.
FWIW, I recently sold LLOY at SIGNIFICANT loss to buy BP at 233.33. Then a 25-year low. But I didn't seriously expect to catch the bottom. Few do, bar from luck. No surprise we have another 25-year closing low today. Par for the course in this game.
But FTSE 100 again closed down. Whilst this was indeed higher during the initial lockdown, BP also saw a 50% divi-cut on 4th August. Mindful that most FTSE stocks have also either cut or cancelled ALL their divis for 2020, with maybe more cuts pending, as long as we don't see further divi cuts here, the bottom seems unlikely to be far off. Though we're probably not there yet? Can't be sure in this climate. So BP a L/T hold. - GLA.
Hi Andy,
Definitely not "game over". All oil stocks dropping, as well as other commodities, because governments have decided to again curtail economic activity to save more lives. Overreaction, some say. They may have a point? Spanish Flu killed approx 50M in 1918. COVID so far, just over 1M.
But we are where we are. As long as government policy continues in this direction, many buyers will stay away not just from BP, but all oil stocks. - GL.
According to some in the industry, global oil demand may peak around 2030. Others think it'll be later. So even with the gradual switch to greener energy, most oil stocks (& other commodities) seem very cheap at this point due to matters out of their control.
Seems more a question of time before global economies start to open up again & see some solid SP recovery here. - GLA.
https://www.bnnbloomberg.ca/total-sees-oil-demand-peaking-around-2030-as-world-goes-green-1.1500978
Keep in mind that before this blasted virus hit the world's economy, BP was frequently well over 400 & paid a much higher dividend. Closing high just in 2020 a decent 504+. Their 52-week high is 521.5.
I'm in a 233.33, but I'm targeting higher than 400 before I exit. Maybe I'm being overly optimistic? Time will tell.
Most of the FTSE 100 has been battered since March. But we're more likely to see better times again after 2020, than not. - GLA.
Hi Crocqman,
Thanks for added clarity. Indeed so regarding MMs. Spot on. More so, selling pressure here is again slightly greater.
I think with BP at about 25 year lows, rather than people just taking a huge hit to sit on cash, we're probably seeing more investors switching their funds away from commodities to enter other sectors due to the increased tightening of lockdown measures in various nations, which have associated consequences for parts of the economy.
Time to leave the screens a while until the bigger picture changes. - GL.
Hi Robbie,
There is no single answer. But one can only buy what's being sold. Vice versa. Shares can't be created out of thin air. If there are REALLY more buyers then, as you indicate, the SP should go up to tempt more sellers into meeting that day's buying demand.
What I know sometimes happens from experience is that these free public sites can make errors. I've seen some of my sells reported as buys. So have others.
A bigger factor is that some bigger trades are delayed before they're reported. They can appear after-hours.
But generally speaking, if the SP is going down, then there is greater selling pressure on the day. The SP drops to encourage more buyers looking for cheaper value to meet the day's selling demand. Unfortunately, these sites are not always accurate from minute to minute, which confuses things. - GL.
Hkt123,
Thanks. Some valid points, as with others.
Mindful that markets tend to look ahead, as soon as we have a more substantial likely timeline for a vaccine & ditto forecasts for recovery of the global economy, this sector will enjoy a substantial bounce. No doubt about that. But personally speaking, I'd be surprised if that was before 2021 due to testing requirements for all new vaccines. Otherwise many people will simply refuse taking it.
But I think there's enough evidence that at least the FED prefers a Trump win again as he's more business & market friendly. If Biden wins he'll increase corporation tax. Hence the FED's recent approach to keep rates low, print more stimulus & weaken the dollar, which tends to boost their stock markets. Hence US markets made new record highs only a few weeks ago, despite COVID-19.
By comparison, most of the FTSE 100 has been a huge disappointment. BP is far from alone. Not that I'd expect it to be over 7000. But that it struggles to even hold 6000 is poor considering it began 2020 at well over 7600. But if we can expect anything, it's that markets can be irrational as often as not. - Cheers.
Hi Hkt123,
It's disappointing to me too, as to any holder. We're close to 25 year lows. But since lockdown measures have tightened again, meaning less travel, so less demand for fuel, no surprise that the entire sector has been hit. In fact, most commodities have fallen back.
Much agree there'll be a VG recovery here in tandem with the global economy. But that'll be delayed as long as many governments policies all over are curtailing economic activity. Anyone's guess how long this will go on for without a vaccine? So BP still a strong buy, but not for those seeking quick profits. - GL.
Share-be-right,
Keeping L/T closing support at 233+ will help, but not a cert as it stands.
Short-term boost to SP? My tuppence worth, realistically, other than more progress on vaccines, which would open up global travel & economies far sooner, little I'm afraid to say. Not as long as we're seeing the return of more lockdowns & more people working or staying at home, so far less travel.
Future dividends need to be watched. I agree that despite the 50% cut announced on 4th August, there's not guarantee we'll avoid further cuts as long as government policies curtail wider economic activity.
But even if 233+ support is lost, keep in mind this is still at VERY L/T lows. Unless one believes the global economy won't recover, IMO, still a great value buy at these levels for L/T hold. - GL.
Robbie,
Might have guessed about America's likely influence on UK markets: most UK stocks further down as I write. Few exceptions.
As another poster said, probably best to leave the screens a while and just sit tight with this until wider recovery seen. BP will be fine, but it'll take global macro-factors to improve. Right now we're seeing more limited lockdowns, which goes against this sector. - GL.
NalaKapala1,
I think when they said buy LLOY at 50p, at the time they were 100% right. Before the Black Swan event of COVID-19 damaged global economies, LLOY had a progressive divi yield, a share buyback & had managed to pay off £22 BN in PPI compensation, heralding much better times ahead. LLOY at 50p was a bargain. How many foresaw COVID?
BP's long-term closing low was 233.70 on 18th March (closing SPs more valid than intraday lows). That was the lowest for over 20 years. If people think things will get even worse from here, then that'll apply to most other stocks & we're probably facing years for significant recovery whatever else we hold.
We know there's no quick fix for this sector until global economic recovery. But as soon as global forecasts improve, so will BP & then it'll consolidate its gains. Whilst the fallback is disappointing, I'm glad I'm in. - GLA.
Though previous point applies, correction to earlier stat: FTSE day high was 5974.88 (not 6007). Glanced at wrong chart when posting in rush. Closed 5899+. So still quite a pullback, with many stocks & various sectors falling back in tandem. - GLA.
Robbie,
Nothing specific to BP can find. Probably recent extensions of lockdown impacting confidence across many sectors. Also less travelling, less need for fuel, etc. Interestingly, the entire FTSE dropped back. From day highs of 6007 to barely 5920 as I write. Volatility that's been par for the course in recent times.
US markets can dominate global sentiment. Whilst UK doesn't follow the upside, when US markets fall, UK's usually follows.
BP, like most stocks, was never going to continue recovering in a straight line in this climate. Setbacks & falls in SP inevitable for the foreseeable future. The significantly better times are still some way off due to too many challenging macro-factors still ongoing. - Regards.
Caitlin,
Good question. BP has a daily volume of well over 33M. This isn't a piddling, small volume AIM stock that a few powerful players can control in some cases. Like all FTSE stocks, it's mostly traded via SETS, an electronic system. -
By the by, BP seems cheap for those prepared to hold on & ride out the COVID-19 volatility. If I had more free cash, I'd add more to yesterday's buy. - Regards & GLA.
NewKOTB,
Thanks. Valid points. Indeed it's diverse & becoming increasingly so. Whatever happens over the next few weeks isn't nearly as important as this stock's longer-term potential for when global economic forecasts start to improve again. As they will do eventually. Just need to ride things out. - Regards.
Hi Marfthew & IceyDicey,
Thanks to both. Broadly agree. I know "support" at 233+ was meant rather than "resistance". Easy to mix them when posting quickly without an edit button.
It's a hard call for when the global economy fully recovers & with it demand for oil. But eventually we can expect a return to growth as evident from longer-term historic cycles.
I think it's also fair to say that while some Western economies are indeed going more green, the largest growing economies, like India, China, Vietnam, et al, will still see oil in huge demand. That'll continue for years yet.
No doubt we'll see further cuts in oil production too if it's needed to support prices if they drop too low. Shale production also recently falling sharply back in the US . No longer as profitable.
So all in all, I think whilst a 500 target seems academic & far from 100% certain, from a longer-term view probably not all that far-fetched. - ATB to both!
Bought at 233.33 about an hour ago, mindful that its previous long-term closing low was 233.70 on 18th March after the initial sell-off. It's gone lower after I bought but no-one buys the exact low. But I wanted to switch funds from a UK-specific stock into a global one. It'd been on my mind a while.
Used funds from taking a huge loss on LLOY as, whilst nothing is 100% certain, rising risks of a No Deal Brexit & possible negative interest rates will hurt recovery throughout that sector. Also, recent loss of 26+ L/T support there a big disappointment.
BP also won't recover quickly. However, as the global economy eventually recovers, so will this. It was over 500 earlier this year & over 550 over a year ago. So as a longer-term hold, ie. well beyond 2020, I think a target closer to at least 500 seems doable. - GLA.