BP Stock Compared to SPY in 2Q17

BP stock outperforms SPY

BP (BP) stock has risen 5.0% since April 3, 2017. In comparison, Royal Dutch Shell (RDS.A) has risen 4.0% in the same period. However, ExxonMobil (XOM) and Chevron (CVX) fell 2.0% and 3.0%, respectively, for that period.

The broader market indicators, the SPDR S&P 500 ETF (SPY) and the SPDR Dow Jones Industrial Average ETF (DIA), rose 3.0% and 2.0%, respectively, in the same period. That’s despite the fact that both ETFs hold XOM and CVX.

BP Stock Compared to SPY in 2Q17

WTI falls in 2Q17

Usually, integrated energy stocks show high positive correlations to crude oil prices. WTI (West Texas Intermediate) prices rose in December 2016 due to OPEC’s (Organization of the Petroleum Exporting Countries) choice to lower oil production. But prices have been volatile in 2017. Crude oil prices have fallen 10.0% year-to-date.

In 2Q17, specifically in May, oil prices rose in anticipation of the meeting of the main oil producers on May 25, 2017. That was due to the possibility of higher oil cuts by OPEC members for an extended period. Crude oil and gasoline inventories also fell in the week ended May 19, 2017, according to API (American Petroleum Institute) data. From May 5–24, 2017, oil prices rose 11.0%.

But then the rally halted. Although OPEC and non-OPEC members agreed to cut production, they fell short of expectations of a few market participants. Oil prices fell 6.0% after the meeting. For more on this, please refer to OPEC Extended the Output Cut Deal: Stable Crude Oil Prices?

Overall, crude oil prices fell 4.0% in 2Q17.

But BP stock rose

Despite, the fall in the price of crude oil in 2Q17, BP stock rose. BP posted strong 1Q17 numbers, surpassing estimates. Its 1Q17 adjusted EPS (earnings per share) more than doubled its 1Q16 adjusted EPS. Its higher upstream earnings offset its marginal fall in downstream earnings.

During the quarter, BP announced production from West Nile Delta and Quad 204, two of its major upstream projects. BP is expected to see a rise in output in the second half of 2017 due to a few of its main projects beginning operations in the year. For more on this, please refer to Could BP Have a Growth Spurt in the Second Half of 2017?

In the next part of this series, we’ll see whether BP’s moving averages are showing a bullish sign.