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Buying or Shorting BP & Shell? Key levels..

May 12, 2021 18:29
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bp, shell,

Today, we'll discuss two oil and gas companies, BP and the Royal Dutch Shell. Both companies heavily depend on oil price, and according to analysts, BP and the Royal Dutch Shell could benefit once the pandemic is over. Oil rose at the beginning of this trading week amid hopes that fuel demand is picking up in the United States as the summer driving season approaches and the rollout of COVID-19 vaccinations there accelerates.

“Oil prices rose today as a result of progress in vaccination campaigns in the U.S., which are helping the country's plan to spend. While there are still plenty of reasons to be bullish, market players have become more cautious as infections have surged in Europe, India, and some emerging markets, while vaccine rollouts have proved slower than anticipated,” said oil broker PVM's Stephen Brennock.

Crude oil price is trading near $60 resistance, but it is important to mention that the International Energy Agency warned that crude oil prices could fall back to $50.3 later this year because of the United States' rising production. BP and the Royal Dutch Shell are fundamentally good companies that are well-positioned for outsized cash flow generation and margin expansion at current oil prices. Even if the oil price decreases, BP and the Royal Dutch shouldn't have problems with liquidity, and if the oil demand continues to rise, so should the price of these stocks.

Many analysts agree that once most people are vaccinated, travel will pick up tremendously, which will drive oil prices higher. At the $65-70 crude oil range, these companies will be able to generate strong double-digit shareholder rewards. Still, investing in shares of BP and the Royal Dutch Shell is not without risks, and while the demand is poised to recover from the COVID pandemic, this recovery may take a lot longer and ultimately result in a permanently lower level of demand for products of these two companies.

Technical analysis (BP)
BP shares have advanced since the beginning of the year, but and the risk of another decline is not over yet. On this chart (the period from May 2020), I marked current support and resistance levels to help traders understand where the price could move. The more often price tests a level of resistance or support without breaking it, the stronger the resistance or support area is. When the price passes through the resistance, that resistance could potentially become support. Looking to trade with BP? The best site with quick sign up and amazing interface can be found at Skilling.

BP has been a good performer over the last several weeks when it came to price gains, and if the price advances again above $26, the next resistance could be located around $28 or even $30. The current support level is $22, and if the price breaks this level, it would be a “SELL” signal, and we have the open way to $20. If the price drops below $20, which represents very strong support, the next target could be located around $18.

Technical analysis (Royal Dutch Shell)
The company's fundamentals continue to improve, and with 79 billion USD market capitalization, this company/stock not expensive. Many analysts agree that there are plenty of reasons to be bullish on Royal Dutch Shell at the current stock price, especially if oil continues to rise.

If the price advances again above $45, the next resistance could be located around $48 or even $50. The current support level is $35, and if the price breaks this level, it would be a “SELL” signal, and we have the open way to $30. If the price drops below $30, which represents very strong support, the next target could be located around $25. Looking to trade? Our favourite for trading with Royal Dutch Shell is without a doubt Ava Trade. Never has it been easier to go long or short in oil shares.

Conclusion
Many analysts agree that there are plenty of reasons to be bullish on BP and Royal Dutch Shell at the current stock price, especially if oil continues to rise. At the $65-70 crude oil range, these companies will be able to generate strong double-digit shareholder rewards. Oil rose at the beginning of this trading week amid hopes that fuel demand is picking up in the United States as the summer driving season approaches and the rollout of COVID-19 vaccinations there accelerates. Still, investing in shares of BP and the Royal Dutch Shell is not without risks, and while the demand is poised to recover from the COVID pandemic, this recovery may take a lot longer and ultimately result in a permanently lower level of demand for products of these two companies.