BP remains weak as Iraq, Libya adds to oil glut

British PetroleumAfter the decision of OPEC to limit their overall output to a range between 33 and 32 million barrels a day, British Petroleum shares have gained an increase of 1 dollar. British Petroleum which is also referred as BP Plc (NYSE: BP) is a famous oil and gas company.

This news is being greeted with a lot of cheers in the oil market because the price of crude oil has now been pushed to approximately $48 per barrel. On the contrary, we believe this news will provide an excuse to go short on stocks of several oil companies which includes British Petroleum and the reason for the same is discussed underneath.

As on the end of trading session on Tuesday, the share prices of British Petroleum (BP) was listed at $36.

There is a net loss of $1.39 billion or $7.6 per share of this London-based company as on second quarter of the fiscal year 2016. This loss is accounted for the total revenue of $47.28billion. If we compare the figures to fiscal 2015, we will see that BP recorded a loss of $5.78 billion or $31.83 per share ($1.91 per Ads) on total revenue of $63.21 billion.

The net profit on a non-GAAP basis for second quarter 2016 recorded a figure of$720 million or $0.23 per share. These figures are way below the estimates made by the analysts. Last year during the same financial period, the non-GAAP profit of BP was $0.43 per share or $1.31 billion.

For the coming 3rd quarter, British Petroleum is expecting to lower the productions as compared to previous quarter on account of adverse impact and maintenance activity at Enterprise Pascagoula Gas Processing Plant (Gulf of Mexico). There is no improvement in the downstream operation as anticipated by the company. In addition to this, British Petroleum also expects refining margins under a lot of pressure for this current quarter.


An informal meeting was conducted in Algiers last week where it was decided by OPEC to limit the output to the range of 32.5 million to 33 million barrels a day. This announcement has lead to a sudden increase in the price of crude oil, but it was for a short duration of time. The main reason behind this is that a meeting will be held in November at Vienna where it will be decided which oil producer has to decrease oil pumping and by how much. There is a spike in the supply of oil because of the shipment from Libya and Iraq. It can be deduced that the announcement to limit the oil production will have no advantage of any kind to BP for this present quarter. In fact, BP will have to face a rough time there will be an oversupply of 1.8 million barrels of oil every day in the global market.

If we look at the historical price chart of British Petroleum, we can deduce that the stock has firm support of 33 levels. The stock’s immediate resistance is 36. The scholastic oscillator is indicating the prospects of sell off because it is close to the overbought region.

British Petroleum Stock Price October 5th 2016

British Petroleum Stock Price: October 5th, 2016

If you are a Binary trader, you should place your trades in the decline of stocks by purchasing “One Touch” PUT Option. You should look for a target price of 33 or even higher with expiry period in the November’s first week.

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