Why Is Short Interest in BP Declining?



Short interest in BP

BP (BP) has recently witnessed a fall in its short interest (as a percentage of outstanding shares)—from 0.6% at the end of May to its current level of 0.4%. This usually shows that the bearish sentiment toward a stock is decreasing. During the same period, BP stock has risen 1.0%.

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Why the change in sentiment?

The change in sentiment toward BP stock could be attributed to BP’s upstream activities. During the above period, BP made a gas discovery in Trinidad, made a strategic alliance with Rosneft for its gas portfolio, extended its partnership with Reliance Industries, and re-churned its exploration portfolio.

BP also announced its 2Q17 earnings during the above period, surpassing estimates. In its 2Q17 earnings, BP also revealed its plan to balance cash flows at $35–$40 per barrel by 2021. But since the end of June, oil prices have surged, and oil prices significantly impact BP’s upstream earnings.

Peer short interest

Royal Dutch Shell (RDS.A), Total (TOT), and Statoil (STO) have also seen declines in their short interest—by 0.13%, 0.06%, and 0.04%, respectively, since the end of May. Shell, TOT, and STO now have short interests of 0.2%, 0.13%, and 0.19%, respectively.

During the same period, Shell and STO saw rises in their stock prices by 5.0% and 5.9%, respectively, though TOT witnessed a 3.1% fall in its stock price.

Continue to the next part for a look at BP’s PEG (price-to-earnings-to-growth) ratio.


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