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BP’s Outlook: What Do Its Financials Suggest?

PART:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Part 8
BP’s Outlook: What Do Its Financials Suggest? PART 8 OF 17

BP’s Moving Averages: 50-DMA on the Verge of Crossing over 200-DMA

BP’s moving averages in 1H17

At the beginning of 2017, BP’s (BP) 50-day moving average (or 50-DMA) held above its 200-day moving average (or 200-DMA). In 1Q17, BP’s 50-DMA broke below its 200-DMA, which could be due to BP’s 4Q16 earnings, which missed estimates.

BP’s Moving Averages: 50-DMA on the Verge of Crossing over 200-DMA

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However, this scenario changed in 2Q17 when BP stock rallied, crossing over its 50-DMA and 200-DMA. Plus, BP’s 50-DMA crossed over its 200-DMA. BP’s 1Q17 earnings exceeded estimates. Also, BP declared production from two of its major upstream projects, West Nile Delta and Quad 204.

Changes in BP’s moving averages in 3Q17

BP’s 2Q17 earnings surpassed its earnings estimates as its Upstream segment’s earnings rose year-over-year. Plus, its upstream project updates further supported its stock price. Due to Hurricane Harvey’s impact on the industry, BP stock declined, which led to its 50-DMA breaking below its 200-DMA.

As the impact from Hurricane Harvey subsided, oil prices started rising, positively impacting BP stock. BP announced that its midstream IPO would hit the market in 4Q17, subject to market conditions. BP recently announced the startup of its sixth mega upstream project of the year, and the rise in BP stock led to a rise in its 50-DMA.

Currently, BP’s 50-DMA stands just 0.1% below its 200-day moving average. This implies that BP’s 50-DMA could cross over its 200-DMA at any time—a bullish technical sign that could cause an acceleration in the rise of its stock price.

Peers’ moving averages

ExxonMobil (XOM) and Chevron’s (CVX) 50-DMAs stand 4.1% and 0.4%, respectively, below their 200-DMAs. Royal Dutch Shell’s (RDS.A) 50-DMA stands 3.3% above its 200-DMA.

Let’s look at the moving averages of the broader market—the SPDR Dow Jones Industrial Average ETF’s (DIA) and the SPDR S&P 500 ETF (SPY). DIA and SPY saw their 50-DMAs stand 4.6% and 3.7%, respectively, above their 200-DMAs.

In the next part, we’ll estimate BP’s stock price range until December 31, 2017.

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