BP Share Price Ripe for a Comeback as it Slowly Abandons ESG

BP share price has moved sideways in the past few months as investors focus on the upcoming quarterly and full-year results. The stock was trading at 493p in London. slightly lower than last year’s high of 505p. It has nonetheless underperformed American oil and gas companies like Chevron and ExxonMobil.

BP shifts from renewables

Oil and gas companies like BP, Shell, and Marathon Petroleum have come under intense pressure in the past few years. Climate activists have continued protesting the companies for their contribution to climate change and global warming. Politicians and regulators have also piled into the companies.

As a result, BP and other companies have announced plans to increase their investments in renewables. European oil and gas companies are more prone to this criticism because of the strict regulatory environment. In 2022, Shell was ordered by a Dutch court to dramatically change its business model. European investors are also more aligned to ESG than their American counterparts.

BP has invested billions of dollars into renewables. It now owns solar and wind farms in several countries. Also, it runs one of the biggest electric vehicle charging infrastructures in Europe. However, as I have written before, it will be difficult for companies like BP and Shell to make money in these industries.

According to the WSJ, BP’s CEO is now reconsidering his focus on renewables. The paper wrote that the CEO was disappointed with the returns in solar and wind. He has then vowed to focus more on oil and gas, which the company has decades of experience.

Read more: BP schools European supermajors.

This is the right decision since BP is primarily an oil and gas company. It is also learning from the bumper results published by American companies like Shell and Chevron. Exxon’s net profit for 2022 jumped to over $50 billion, making it one of the most profitable companies globally. Chevron, on the other hand, made bumper profits and announced a $75 billion share buyback.

BP share price forecast

BP stock price peaked at 505p in 2022 as the price of oil and natural gas soared. Recently, the stock has struggled to move above last year’s high. Its attempts to bound back found strong resistance. The shares are now slightly below the ascending trendline that connects the highest points on November 30, January 3, and January 31.

BP shares are also slightly above the important support at 469p (30th August and October 7 highs). Also, it is higher than the ascending trendline that connects the lowest levels since October 18. The stock has formed what looks like a symmetrical triangle pattern that is shown in green. It is also above the 50-day moving average.

Therefore, BP stock price will likely have a bullish breakout ahead of the company’s earnings and as investors cheer the company’s change of strategy. This rebound could see it retest the important resistance point at 506p (November 4 high). On the flip side, a drop below the psychological point at 480p will invalidate the bullish view.

BP share price
BP stock price chart