The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Morning all
Oil down this morning, as I suspected it would be, the oil premium has benn sold on facts. The iranian ' retaliation' was designed to look like a hard response while in truth it was a choreographed farce. Iran informed the Americans hours before the attack commenced. The drones took fro. 4 to 6 hours to reach Israel, hardly a lightening, stealth strike and after Iran firework show they immediately released a statement saying they there campaign against Israel is now over - as long as Isreal does not retaliate. Puffing out of Iranian chests over. Iran has much more destructive weaponry but decided against using them.
In summary, Iran does not want a war with Isreal. Isreal does not want a war with Iran. The Americans do not work Isreal to retaliate. Iran wants the US to stop Israel retaliating. Israel wants the US to allow a Rafar operation for restraint on Iran.
Away from this temporary side show, fundementals are all that matters in the medium to long term, as meoryou rightly mentions.
Hi Cong
I hope all's well with you. It is always a pleasure to see posts from you.
With the caveat that nothing is certain with the energy sector. I would certainly hope that BP share price starts with a 7 by year end 25.
Good morning Redbluerhino, Darren Taylor & Howardzz
Redbluerhino - great comment and posts.
Isreal is a rogue state. Their disproportionate destruction of Gaza and their campaign of genocide in response to October 7th is testament to this.
The west's mealy-mouthed concern for the two million people in Gaza at the same time sending Isreal the bombs and bullets to kill the carry out their campaign is shameful and abhorrent. In this live situation nothing can be ruled out and all possibilities are possible. However, I do not see Isreal wanting a full scale conflict with Iran and Iran certainly does not want a full scale war with Isreal.
With the US election six months away, Biden will be telling Bibi any significant response that could escalate to an all out middle Eastern war and the consequences for the prices at pumps - and therefore his re-election - in the run up to that election is a red line for US support for Isreal. Biden has turned a blind eye to sanctioned Iranian oil 3mbpd being sold to help keep a lid on price and will not allow this to be jeopardised.
I
Isreal have achieved their aim in bombing the Iranian embassy. I agree with your opinion that focus is now off of Gaza and the political pressure is lowered on Bibi as Israeli unity in the face of attack will take precedence. This has already been achieved at no real cost - one child injured - I don't see any strategic advantage in a wider conflict for Isreal. Maybe Rafah campaign permission could possibly be a bargaining chip in this death game.
and so to oil, the market will be calculating all the possibilities and probabilities with 'buy the rumour sell the news' fear of the unknown being replaced with the known, I would not be surprised to see lower oil prices as s result when the oil market opens.
That said, I do see this situation as a short term side show as far as oil is concerned. I agree also with Darien's comment regarding the importance of Opec's 'management ' of supply and the resilience of demand that is set to grow into peak season as more influential in the medium to long term so any fall should soon be recovered going forward.
I would not be surprised to see $100pb+ before the end of 2025 once the election is over and limited global supply comes into focus. Prior to the election, possible releases from the strategic reserves in the US and possibly China will be used to depress price but will be temporary.
I guess I should mention BP !
I note some investors have recently sold. Enjoy your profits anyone who has decided to sell. It is fully understandable, following the repeated peaks and troughs experience from May'23, that concerns of a further repeat could be just around the corner. With previous selling opportunities around the peak 560s followed by 20% drops I can understand why some are selling and taking profits.
Personally I have no intention to sell any BP for the foreseeable until true value is achieved maybe in
Morning all
This was a telegraphed attack. Iran advised the US hours before launching their attack and may it clear that their retaliation is now over. I expect a symbolic response from Israel if any at all.
Paradoxically, this huge telegraphed retaliation for the Israelis attack on the Iranian embassy in Syria, that was planned to fail or cause limited damage to Israel, could see the price of oil down on Monday as the oil premium for the unknown is now known. If the Israelis response is token or none., the price of oil could be down monday. I don't see this action as the start of a regional war or $100pb
Have an interesting Sunday all.
Mark
Afternoon all. Been reading the exceptional posts from the sidelines.
An interesting article that will probably mess with your decision process regarding hold or sell. I hope it's of interest if not assistance.
Mark
HFI Research
Geopolitics Dangle The Prospects Of Higher Oil Prices, But Fundamentals Lag
HFI RESEARCH
APR 11, 2024
PAID
The prospects of geopolitical risks escalating have prompted some to believe that oil could spike to as high as $100/bbl. But we've been in the business long enough to remember Abaqiq, which physically took supplies off for a short while only to see both energy stocks and oil sold off materially after.
Geopolitical risk is like the carrot to the donkey for oil bulls.
It's ever-present but always far away. My advice to anyone trying to find a true edge in oil trading/investing is to ignore geopolitics. While it's never your job to completely disregard it, my advice is to heavily discount it unless something actually happens.
So as geopolitics dangles the prospects of higher oil prices for many, real oil watchers should know that the fundamentals have recently worsened. In our Monday WCTW, "Follow the Process." We pointed out that Asian topping margins have gone negative and crack spreads are following suit. Refining margins will be the leading indicator for crude this year, and with refining margins peaking and still trying to find the bottom, crude won't get the tailwind it needs.
To make matters worse, we think oil speculator positioning is likely to show another sizable increase in this Friday's CFTC report. Net long positioning is already back to October 2023 levels, a level which saw oil prices hit the $60s just a few months later.
One key difference to keep in mind is that while we don't expect a dramatic reversal in positioning, it does present itself as a headwind.
On the fundamental side of things, US crude storage saw a sizable build last week with another large build expected for next week's report. Looking at the current trajectory for US crude storage, April will be a weak month.
Additional comment
Exclusive-UAE's ADNOC recently eyed BP as takeover target, sources say"
https://uk.investing.com/news/commodities-news/exclusiveuaes-adnoc-recently-eyed-bp-as-takeover-target-sources-say-3430115
Evening all. An interesting article.
ADNOC recently eyed BP as a takeover target - Reuters
Apr. 11, 2024 1:55 PM
BP Retail Gas Station. BP and British Petroleum is a global British oil and gas company headquartered in London.
The United Arab Emirates state-owned oil company ADNOC recently considered BP Plc (NYSE:BP) as a potential takeover target. BP briefly went positive amid the news report.
ADNOC's interest in BP (BP) didn't progress beyond preliminary talks, according to Reuters report on Thursday, which cited sources familiar with the matter. Political considerations also weighed on the deal evaluation.
ADNOC and BP spoke directly in recent months and Adnoc looked for advice from banks on a possible transaction, according to Reuters. Adnoc looking at several options, including purchase a stake in BP.
BP was one of several companies that ADNOC has looked at, Reuters said. Adnoc has looked at other international companies in order to gain access to a larger gas and liquified natural gas portfolio.
BP (BP) has a market cap of $110.3 billion.
ADNOC and BP declined to comment to Reuters
Shell natural gas related
https://oilprice.com/Latest-Energy-News/World-News/Shell-Expects-Lower-Q1-Earnings-From-Natural-Gas-Trading.html
Happy Easter all.
A fool's article today.
ISA millionaires think the share price makes BP a buy. Are they right? | The Motley Fool UK
https://www.fool.co.uk/2024/03/31/isa-millionaires-think-the-share-price-makes-bp-a-buy-are-they-right/
Oil markets are set for a busy week, but so far neither US inflation data nor the monthly OPEC report managed to disrupt the stagnation of oil prices, with ICE Brent still trading around the $82 per barrel mark. The end of US refinery maintenance, coupled with better-than-assumed demand figures, might be one of the key trends to watch out for. At the same time, drone strikes on Russian refineries could squeeze diesel markets.
The wait for a sentiment shift continues
Afternoon all
Regarding the Energy Profits Levy, as I posted yesterday BP's UK businesses account for less than 10% of its global profits. Shell makes about 5% of its revenue in the UK so not too much to be concerned about with the scam.
In addition the tax breaks nearly wipe out all taxes if investment is made into their north sea production.
By way of an example, If an oil company makes £100 million then current tax rules HMRC would claim £75 million from this. But if the company reinvests all its north sea earnings into north sea oil and gas extraction, it wouldn’t just pay zero tax, it could also carry forward costs against future gains – or double the tax relief if it invests in decarbonisation. Now if Labour are elected and scrap the tax incentives then it would be something to be concerned about but until then.
Just on moving to the US. This would not avoid the EPL as any company has to pay UK tax fir north sea production.
Really amateur number crunching but hopefully you get the gist.
Mark
Good afternoon Spights
A fairly balanced unsurprising budget. All details were already out there including the windfall tax extention.
As BP's UK businesses account for less than 10% of global profits, while Shell makes about 5% of its revenue in the UK even with a Labour government ( God help us ) not too much to be concerned about.
Out for a walk now before monsoon season kicks back in.
Take care
Mark
Afternoon all. By all I mean Spights !!!
BP can be serious force in EV charging, suggests UBS
BP plc is a much better equity story than just how much cash it is handing out to shareholders, according to analysts at UBS.
All of the talk recently has been about share buybacks and its low relative rating, but a low oil price breakeven and efficient production base will provide the funds to sustain total distributions, while also funding growth from low carbon, said the Swiss bank.
UBS noted that while the electric vehicle transformation might have stalled recently, peak oil demand is still on the horizon and as EV use grows, this will displace three million barrels of daily oil demand by 2030 and nine million by 2040.
BP is better prepared for this energy transition than peers, UBS suggested, even with higher debt and as its businesses here gain scale, breakeven will fall to US$40 per barrel.
EV charging is also a natural area for BP to succeed given the fuel marketing business it already has, plus its real estate in key strategic locations and an improved convenience offering.
BP is making partnerships with OEMs (including Tesla), with lessons learnt having been an early adopter.
By 2030, UBS sees this business as being worth 138p per share or more than the lost value in fuels.
Buy with a 600p share price target is the Swiss bank’s view on BP shares
Good evening all
Not a bad day today, apart from the rain.
Just been reading some research that shows that those who stay invested over the long term in quality companies will generally do better than those who try to profit from trading or selling out during a challenging ( temporary) periods, Attempting to time the market is crazy hard in the short term and is fraught with difficulties. I have had my fingers burned but even for the "professionals'. research shows that somewhere between 70% and 90% lose money over the long term by trading or attempting to time the market in the short term.
Any gambler will probably have some wins from time to time and when there do, boy, do they want the whole world to know. Less so when they lose all their gains and more.
So as we move into the weekend break with oil purring along nicely, BP spouting some legs and demand for oil at a four year high and expected to continue to grow into H2 with a very tight physical market, BP's strategy coming together and 2025 targets looking easily achievable, comes warm.glow of a near certainty of very handsome rewards for staying invested and going the distance.
" It's time In he market rather than timing the market" as the old saying goes and this will eventually make you and me very happy and extremely rich ( hopefully) !!!
Great posts all this week, have a great weekend.
We go again next week
Mark
Gingy
Hi mate , I've been there, I have vented my frustration with share prices in the past. I have ranted and raved and focused not only on day to day but hour by hour share price movements. All this brings is stress especially over something you have no power to control. Seeing other shares rise while BP underperforms can be stressful but that stress can more detrimental to your mental health and peace of mind than temporary market movements as it was for me. There is never any actual loss until you crystallise the loss by selling. So if you remain invested it is just moving numbers.
If you truly believe in the company, as I do, patience may be frustrating and difficult at times but it really is a virtue. In investing. Never question yourself if you believe in your investment while seemingly no one else does. There are institutional investors who have billions invested in BP, they do so because they can see beyond the horizon.
I have a sizable amount invested in BP and have been adding to this beyond my original plans. If as a LTH you can hang in there, take the safe dividends each quarter and see through this challenging period you, and all other investors in BP will be handsomely rewarded ( excluding unforeseeable events i.e. another GOM disaster or WW3 ! )
So if you can, have the same faith as the institutions who talk regularly to the board and invest billions.
Nothing is for certain in investing but BP is my number one pick in my reward to risk portfolio. Good income, low risk, and, I expect large capital growth over the coming years.
Have a great evening mate.
Mark
Hi Spights
A mad five minutes !
It has been a interesting, if not puzzling, six months as a BP share holder but my confidence remains the same. As meoryou posted earlier, there are numerous possibilities as to why the company and sector are currently unloved but I honestly believe it is just a matter of patience and time before BP leaves the station and heads north.
Onwards......