BP: A remarkable recovery that will help push the FTSE to new highs
BP reported their numbers this morning; and not only did they beat numbers, they caused a share buy back, the FTSE 100 pushed back above 7500, Oil pushed above $60. It is a fantastic recovery story. This is in spite of BP having been a terribly disappointing stock this year. Even though they are only up 5% on year. However when you look at the past 2 years 2 months; they are up 50%. The BP Group Chief Executive Bob Dudley has done a marvellous job. He was handed an exceptionally difficult job. Furthermore he was pilloried by press for his wages, but has done very well and deserves every penny by overseeing this incredible recovery story.
Looking in to the future of BP, David Buik, Senior Market Commentator of Panmure Gordon says that the future looks bright. The Deepwater Horizon oil spill was devastating for the company. It has cost them around $40bln. However now that it is almost finished we can finally see some expansion plans in the near future. The only proviso being oil doesn't drop too far below the $50 level. The wider oil market is showing similar recoveries and this should be mirrored in the data release from Royal Dutch Shell PLC on Thursday.
On the story of a possible bid David says it is nonsense. The only company that could make the purchase would be Exxon Mobil. In contrast Exxon Mobil would have to borrow vast sums of money. On the other hand, David says that in the current political climate the British government would not allow it to happen. There is increased scrutiny on the purchase of British companies and it would not work in the current climate.
With Q4 fast approaching, will oil lead the FTSE 100 to new highs? Uniquely David suggests that it is the dollar related stocks that will help push the FTSE higher. He also moves on to say that you cannot ignore the contribution of Pharmaceuticals, Tobacconists and Banks. His only worry for the UK index are the supermarkets. David believes that their margins are too tightly squeezed to allow much room for significant growth.
You can see more from David Buik on Core Finance by using this link: http://www.corelondon.tv/?s=david+buik
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