Many assets have performed well this year. Stocks hit new all-time highs. So have gold. Even bitcoin is back into rally mode. But oil can’t seem to catch a break.
In theory, a strong economy should mean rising energy demand, which should be good for oil.Yet despite OPEC production cuts, oil prices can’t seem to hold much past $70. And that’s hitting energy company earnings hard.
That’s creating poor performance for energy players. Among the major oil firms, BP (BP) has lagged its competitors. Shares are off 15% this year, and the company has posted a loss overall, although they did just beat on their most recent earnings.
Yet revenues are down just 3%, a strong sign given oil’s overall weakness. And with this year’s selloff, shares look like a bargain at less than 8 times forward earnings.
Oil can be cyclical, and its poor performance now is unlikely to last.
Action to take: Investors may want to start accumulating shares here, as a potentially strong winner play into 2025. Based on its recent payout, BP pays a dividend of about 6%, higher than other peers in the major oil space.
For traders, shares have been trending down, and the most recent selloff, even after an earnings beat, puts shares in oversold territory. The January 2025 $31 calls, last trading for about $0.75, could see a mid-double-digit move higher on an oversold bounce over the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.