BP News

The BP share price decline briefly paused yesterday, but the drop may resume today. Rising COVID and OPEC+ pose a serious threat to the oil giant. BP PLC (LON: BP) ended Tuesday's session at 280.15p, higher by 1.70p (0.61%). July has been tough for multinational energy supermajor BP. The share price has lost 15% so far this month. Furthermore, recent developments suggest the selloff may just be getting started. The resurgent COVID-19 virus has rattled markets in the last week. An alarming rise in cases has forced investors to rethink the reflation trade, causing steep losses in risk assets. Aviation, travel, and leisure stocks have all suffered serious setbacks recently. And should the situation worsen, energy demand should soon turn lower. Whilst this is an obvious concern for BP, it is by no means the biggest threat to the share price. Opec+ agrees to increase output Starting in August, OPEC and its allies will pump an additional 400,000 barrels of oil per day. Furthermore, in response to rising energy costs, the oil-producing nations have agreed to increase this figure to 2 million bpd by the end of the year, continuing through December 2022. The announcement sent crude oil lower by 7.3% when the futures market opened on Sunday evening. Now trading at $66.60, WTI has fallen 13.5% from the 2021 high of $76.98, set earlier this month. And although the customers at the pump will welcome this, BP investors will certainly not. BP technicals deteriorate The daily price chart highlights a series of negative developments. Firstly, we see the BP share price lost the support of a long-term trend line as it slid below 314p. Furthermore, the decline has forced the price below the 50, 100, and as of Monday, the 200-day moving averages. Early in yesterday's session, BP did recover the 200 DMA at 281.92p. However, crucially, the price settled beneath the important long term momentum gauge. This is particularly worrying and suggests the price may fall further. A logical downside target is the January 250.35p low, which provides the start of the broken trend line support. The Relative Strength Indicator (RSI) reads 26.34, which indicates an oversold condition. Therefore, should BP extend lower, it may be prone to a violent reversal. Furthermore, if BP recovers the 200 DMA, it would alleviate the immediate downside pressure. However, overnight, oil futures are on the slide again and lower by 0.8%, which suggest the BP share price will be on the backfoot when trading commences this morning. BP share price chart (Daily) Follow Elliott on Twitter.

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