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Is BP Ready for Lower Oil Prices?

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Part 11
Is BP Ready for Lower Oil Prices? PART 11 OF 17

Interpreting BP’s Moving Average Trends after the 2Q17 Earnings

BP’s moving averages

BP (BP) stock saw an uptrend due to increasing oil prices in 2H16. In 1H17, BP’s 50-day moving average held above its 200-day moving average. In 1Q17, the stock broke below its 200-day moving average, likely due to BP’s 4Q16 earnings, which missed estimates.

But the scenario changed in 2Q17, when BP stock rallied, crossing over its 50-day and 200-day moving averages. BP’s 50-day moving average has actually crossed over its 200-day moving average.

Interpreting BP&#8217;s Moving Average Trends after the 2Q17 Earnings

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BP also exceeded its earnings estimates for 1Q17 and declared production from two of its major upstream projects, the West Nile Delta and the Quad 204.

Changes in BP’s moving averages in 3Q17

In 3Q17 so far, BP reported 2Q17 earnings that surpassed its earnings estimates. BP’s Upstream earnings rose YoY (year-over-year), and other Upstream project updates have further supported the stock. At the same time, WTI (West Texas Intermediate) prices have risen 6.8% so far in 3Q17.

BP stock stayed volatile until the OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC meeting on July 24, 2017, after which BP stock surged.

BP’s 50-day moving average stands just 0.2% above its 200-day moving average. If oil prices slide, it could pressurize BP stock, which could cause its 50-day moving average to break below its 200-day moving average—a bearish technical sign. This could cause an accelerated stock price fall, and so it’s vital that oil prices hold at current levels (or rise) for BP stock to stay in an uptrend.

Moving averages of peers

Royal Dutch Shell’s (RDS.A) 50-day moving average also stands 2% above its 200-day moving average. However, ExxonMobil (XOM) and Chevron’s (CVX) 50-day moving averages both stand 3% below their 200-day moving averages.

The SPDR Dow Jones Industrial Average ETF’s (DIA) and the SPDR S&P 500 ETF’s (SPY) represent the overall economy including varied industries. Notably, DIA and SPY have 50-day moving averages that are 5% above their 200-day moving averages.

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