BP stock price has lost some steam after the company put out a lowered outlook on Brent crude futures for the next 30 years.
London-based oil and gas company BP Plc (LON: BP) is one of the many companies hit by the coronavirus pandemic. On Monday, the energy giant revealed that it reduced its expectations for the price of oil for another 30 years. In response to the energy giant’s announcement, BP stock fell in pre-market prices.
According to BP, futures for the Brent crude international benchmark is expected to stay within an average of $55. BP expects this to last from 2021, all the way to 2050. The Brent crude futures forecast is a 27% reduction in the figures offered by the company’s 2019 annual report.
The company also added a price forecast for Henry Hub. BP says the Louisiana pipeline which functions as the epicenter for New York Mercantile Exchange futures contracts, will also remain at a $2.90 average until 2050. The Henry Hub forecast is 31% lower than was posited in the same report
Before now, BP was already on the road to reducing its carbon economy and energy system. Now, in the aftermath of the pandemic, the company has decided to speed up this plan. If the company plans to go well, BP will become a net-zero firm latest by 2050. A net-zero firm is one that has achieved a general equivalence or parity, between the number of emissions it produces, and the emissions absorbed from the atmosphere.
BP stock previously closed at 323.05p. Currently trading at 311.20p, the price has lost nearly 12p and dropped by 3.62%. Just like most other companies, 2020 has not been the best year because of the coronavirus pandemic. In the last five days, BP stock has lost over 15% and more than 3% in the last month.
These losses are more in focus when considering its performance over a longer period. In year-to-date performance, BP stock has lost 34.16% and a noteworthy 42.07% in the last year. However, some respite is available in the company’s 19.27% gain it pulled in over the last 3 months.
All of the company’s post-coronavirus plans could help the stock get a bit healthier but might be a long-term result. For now, BP says that the company will be hit by non-cash impairments and other needed write-offs in the current quarter. The company puts these losses at a net range between $13 billion and $17.5 billion. At the moment, BP cannot precisely say how much of a dent this would put in the company’s finances.
Recently, BP announced that its 70,100 staff strength will reduce by 10,000 as it tries to manage the impact of the coronavirus pandemic. While laying off workers at a time like this is not uncommon, the move might help BP keep its figures healthy.
According to BP Group CEO Bernard Looney, the price outlook adjustment, amongst other things, will help the company’s fate. He stated:
“I am confident that these difficult decisions – rooted in our net-zero ambition and reaffirmed by the pandemic – will better enable us to compete through the energy transition.”
For other stock market news, please follow the link.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.