The BHP share price retreated this week even after the company reported strong financial results. The stock declined to 2,126p on Monday and then rebounded to 21,88p on Tuesday. The shares are up by more than 132% from their last year’s low. It is also about 9% below the highest level this year.
BHP news. BHP is the world’s biggest miner with more than $42 billion in annual revenue. It competes with companies like Anglo American and Glencore. The firm deals with commodities like copper, zinc, uranium, iron ore, coal, and petroleum.
In a report published on Tuesday, the company said that its crude oil production declined by 6% in FY 2021 while its copper production fell by 5%. Zinc and uranium production declined while iron ore rose by 2%. While most of the company’s production declined, it generated bumper profits, helped by the surging commodity prices.
In the past year, most commodities like iron ore, copper, and crude oil prices have more than doubled. Indeed, the top 40 miners are expected to make more than $118 billion in net income this year. This is substantially higher than the income of $70 billion and $61 billion in 2020 and 2019.
Still, the BHP share price has struggled because of the overall weakness of commodities as the number of Covid cases keep rising. Key commodities like iron ore, crude oil, and copper have all lost momentum.
The stock has also retreated after Australia’s government forecaster report said that iron ore prices will start easing this year. You can read the full report here.
The biggest story today is that the company is considering moving out of the oil and gas industry. The firm is said to consider selling its petroleum business or spinning it into a publicly-traded company. Analysts value this business at more than $14.3 billion. The move will follow that of Anglo American, which separated its coal business into a separate entity. The firm sold its shale business to BP for $10.4 billion.
BHP share price analysis
The daily chart shows that the BHP stock has been stuck in a range between the support and resistance levels at 1,987p and 2,408p. The stock is also at the same level as the 100-day and 50-day moving averages. It is also substantially higher than the important support at 1,850.
Therefore, for now, the stock will likely remain in this range, although I suspect that it will bounce higher if it confirms the exit from the petroleum business. If this happens, the next key level to watch will be at 2,410p. On the flip side, a drop below 2,000p will invalidate this forecast.