The warning by the International Energy Agency (IEA) that crude oil demand had stalled due to the spread of the COVID-19 delta variant has put the BP share price and those of other energy stocks under pressure this Friday. The IEA says that demand in July dropped off by 120,000 barrels per day, and total demand could drop as much as 500,000 barrels per day for the rest of 2021.
Some of the world’s biggest crude oil importers, such as China and India, are taking the brunt of the new variant’s spread, prompting new restrictions in transportation and travel, two industries that depend on hydrocarbons made from crude oil.
Also dampening sentiment on the day is the payment default of $29.3 million being made to the Gambian government after the company failed to drill an exploration well in the offshore A1 block. The company had blamed a change in corporate strategy towards low carbon fuels for abandoning the project.
The BP share price action trades 1.05% lower as of writing.
BP Share Price Outlook
Friday’s muted price move has violated the lower edge of the ascending channel. Confirmation of a breakdown of this level by a 3% penetration close below the channel or two successive candle closes below this level must be sought. By extension, these confirmation moves will also take out 25.19 in the process, opening the door towards 24.02. Below this level,
22.79 and 22.01 serve as the additional targets to the south.
On the other hand, bulls would need to see price staying within the channel, targeting 26.01 initially. If this barrier is uncapped, the pathway towards 27.15 becomes clearer. This also leaves 28.47 as the only barrier to the north standing between bulls and new 2021 highs.
BP Shares: Daily Chart
Follow Eno on Twitter.