The BP share price has pulled back sharply as concerns about a recession continue. The stock is trading at 383p, which is about 16% below the highest point this month. Other energy stocks have also crashed, with Shell falling by 15.30% and the iShares Global Energy ETF (IXC) approaching its bear market.
Recession fears drag BP.
Energy stocks have had a strong performance this year as crude oil, and natural gas prices have surged. Oil has risen by more than 63% from its lowest level this year. Similarly, the price of natural gas has surged because of the ongoing crisis in Ukraine.
Now, energy stocks have slipped as investors worry about the risks of a recession. In a statement on Wednesday, Fed’s Jerome Powell has warned that the country will likely see a recession in the coming months as it continues hiking interest rates. A recession tends to lead to weak oil prices and thinner margins.
Still, with oil trading above $100 per barrel, analysts believe BP will deliver strong annual results this year. Moreover, the firm has committed to spending most of its free cash flow on share buybacks and dividends, making this pullback a good buying opportunity.
Meanwhile, the BP share price has retreated as the company makes several important corporate actions. Early this month, BP announced that it had sold its 50% stake in Canada’s Sunrise oil sands project. The deal was valued at over c$600 million.
At the same time, the firm took a 40% stake in a large renewable project in Australia. It will take a stake and operatorship of the AREH project in Pilbara, Western Australia. At full scale, the project will produce 1.6 million tons of green hydrogen per year.
BP share price forecast
The daily chart shows that the BP stock price has been in a strong bullish trend in the past few months. However, the stock has recently staged a major pullback as energy stocks recoil. As a result, it is now trading along the lower side of the ascending regression trendline. The stock has also moved below the 25-day and 50-day moving averages, while the MACD has moved below the neutral point.
Therefore, the outlook for BP share price is bearish in the near term, with the next key support being at 350p. However, a move above the key resistance point at 400p will invalidate the bearish view. However, in the long-term, BP shares will bounce back as oil prices hold steady.