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Why Short Interest in BP Has Plunged

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Short interest in BP

BP (BP) has observed a fall in its short interest (percentage of outstanding shares) from 0.3% on October 2 to the current level of 0.2%, which usually shows that stock’s bearish sentiment has decreased. Also, during the same period, BP’s stock price has risen 14.5%.

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Why the change in sentiment?

The change in sentiment for BP stock could be due to a series of events that have occurred since October 2, 2017.

To begin with, BP posted its 3Q17 earnings, which surpassed the estimate. Plus, in the quarter, BP launched an IPO (initial public offering) of its wholly owned midstream master limited partnership, BP Midstream Partners LP (BPMP). As BP has vast midstream assets in the United States, the company used some of these assets to raise funds. Also, in 4Q17, BP decided to sell its stake in the Bruce assets in the North Sea. This sale is part of BP’s divestment strategy to focus on only core assets.

In the same quarter, BP announced the launch of its third lubricant blending plant in China to take advantage of rapidly growing demand in the Country. The plant would cost around $230 million, which would represent the single largest investment by BP in a blending plant globally. And last but not least, BP announced the start-up of its seventh mega upstream project, Zohr.

Peers’ short interest

BP’s peers YPF (YPF), Suncor Energy (SU), and Cenovus Energy (CVE) have also witnessed a falls in their short interest of 0.1%, 0.3%, and 1.4%, respectively, since October 2. Currently, YPF, SU, and CVE’s short interests stand at 0.56%, 0.21%, and 1.6%, respectively. During the same period, YPF and SU have seen a rise in stock prices by 14.4% and 7.6%, respectively. Also, CVE saw a rise in its stock price by 8.8%.

Read on to the next part of this series to learn where BP’s valuation stands ahead of earnings.

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