Medium term17 May 2023 08:28
For those forecasting sub-£3.00 for bp, suggest you take a beat. Oil is soft, largely because Indian and Chinese demand is being sated by cheap Russian shipments. Gas is soft because the US is supplying LNG to Europe on the back of a mild winter (though its 5-6 times the price at Rotterdam TTF vs US Henry Hub, so who wouldn't ship it here?). Forward earnings will be lower if these prices hold. But: China pushing global demand over 102mmboed for the first time ever; empty-ish EU storage; French nukes off line; a colder winter. All these will support higher prices this or next year, while bp gets its balance sheet back in order and funds additional drilling alongside big renewables projects. whatever your view of Looney, dividends and other company matters - the outlook is very positive for the firm (lifting costs on Schiehallion down 50%!). I'd just stick and wait it out - 2 or 3 years and you will be handsomely rewarded.