BP share price upward momentum is continuing, supported by the overall higher crude oil prices. The shares are trading at 311p, which is the highest point since July last year. The company’s stock is the most actively traded today in the FTSE 100, according to data by Hargreaves Lansdown. Similarly, Royal Dutch Shell share price has jumped by more than 1.45%.
What’s happening: BP share price has been on an upward trend for months. It has jumped by more than 65% since October mostly because of the rising oil prices. Today, the price of crude oil has jumped to an eleven-month high after the sharp drop in US inventories.
Also, the price has soared because of the recent decision by Saudi Arabia to slash oil production in February and March. This, and the potential demand increase, as more countries vaccinate people, has led to a strong performance by BP and other oil companies. As a result, investors are now hoping that BP will deliver strong results this year and possibly boost its dividend.
BP has a key risk: BP faces a major risk ahead. While oil prices have been rising, in reality, there is a possibility that the increase will be short-lived. Furthermore, US producers are ramping up production, which could affect prices. Also, there’s a risk that countries are not vaccinating fast enough, which could affect oil demand.
BP share price technical outlook
In my last update on BP, I warned that it could get worse before it gets better. In the piece, I predicted that the shares would drop to about 220p and then bounce back. Looking back, that argument was wrong.
On the daily chart below, we see that the BP share price is above the 50-day and 200-day moving averages. The two are about to do what is known as the golden cross. Also, the Relative Strength Index (RSI) and the Average Directional Index (ADX) have continued rising.
Therefore, there is a possibility that the BP shares will continue rising as bulls target the next resistance at 350p. However, as mentioned above, there’s a risk of crude oil price reversal, which could push the stock lower.
BP shares technical chart