BP and Shell share prices locked in oil price war

The oil giant’s operational strength, he considers, gives investors more confidence that it will regain its footing earlier than most. While acknowledging that BP is heavily exposed to the European economy, Reitmeister also noted that it offers the biggest dividend yield — north of 10%.

Conversely, Shell is projected to report earnings of $0.54 per share in its next earnings release at the end of April — which would represent a decline of just over 27% from the previous quarter — according to Zacks.

Meanwhile, the firm estimates earnings of $1.12 per share and revenue of $248.55bn for the year, which would represent changes of -72.28% and -29.41% respectively from the prior year. It has the stock down as a sell.

Is oil headed for an apocalyptic April?

Despite the gloom surrounding the sector, Paul Sankey, managing director at Mizuho Securities, recommends investors start building positions in quality oil companies with good management and higher levels of debt, adding the caveat, only “if the quality is good and the company is able to service its debt”, according to Yahoo Finance.

Of course, the spat between Russia and Saudi Arabia has not helped oil stocks. Any hopes that the recent G20 leaders’ videoconference summit might produce a resolution were dashed when the post-summit statement made no mention of oil.

The dispute centres on Russia’s refusal to reduce production as part of OPEC’s efforts to prop up prices. This prompted Saudi Arabia to raise production markedly, while cutting the official selling price for crude exports.

Storage is also a growing challenge. While diesel, fuel oil and crude oil can be stored for years without degradation, the additives used in petrol means it has a much shorter shelf life — typically around six months.

As the first quarter of this year came to a close this week, reports abound that oil prices have just seen their worst quarter on record. Barclays expects WTI Crude to average $28 a barrel this year and Goldman Sachs has previously warned that it could fall to $20 — a view shared by ING strategists Warren Patterson and Wenyu Yao.

Furthermore, Goldman Sachs recently indicated that global daily oil demand could fall by more than 18.7 million barrels next month, according to The Wall Street Journal.

Meanwhile, one of the world’s largest independent oil trading companies, Vitol, predicts a fall of 20% — equivalent to dropping 20 million barrels a day — in global oil demand over the coming weeks as coronavirus wreaks further havoc on economic activity.

Source: This content has been produced by Opto trading intelligence for Century Financial and was originally published on cmcmarkets.com/en-gb/opto