BP Share Price: Oil Prices Slump as Markets Price in a Hawkish Fed

BP share price slipped on Wednesday as investors chewed on the latest UK CPI reading and potential US interest rate hike. At press time, the oil and gas giant was trading 1.56% lower at 535.9p.  BP has a total market cap of £95.94 billion.

Economic Sentiment

Oil and gas stocks were in the red on Wednesday as markets price in an 86% chance of the US Federal Reserve raising interest rates by 25-basis points in its next policy meeting. Fed officials, including Atlanta Fed President Raphael Bostic, suggested that rates could continue to rise as he anticipated the next raise to be implemented in the next meeting.

Markets are also reacting to the latest UK inflation data released earlier on Wednesday. The UK Consumer Price Index (CPI) rose 10.1% in the 12 months to March, down from 10.4% in February, but ahead of consensus analysts’ estimates of a 9.8% increase. Central banks’ officials in Europe have become wary of inflation and have suggested that interest rates should continue rising.

Oil prices plunged on Wednesday as potential Fed interest rate hikes that could slow growth and curb oil consumption, eclipsed strong Chinese economic data and a decline in US oil inventories. At the time of writing, Brent crude oil was trading 1.63% lower at $83.35 per barrel, while US West Texas Intermediate (WTI) crude oil slipped 1.71% to $79.48 per barrel.

China’s economy grew by a faster than expected 4.5% in the first quarter as the company’s oil refinery throughput rose to record levels. China is the second largest economy in the world and the top crude oil importer.

Data by the Energy Information Administration (EIA) shows that US crude stockpiles declined last week after increasing in the previous week. According to the government agency, the Biden administration pulled oil again from reserves to ease the tight market supply that could have led to high fuel prices.

BP share price has plummeted off the back of the recent slump in oil prices. The British oil and gas company is slated to release its earnings report on May 2, 2023.

BP Share Price Outlook

BP share price has been under intense pressure for the past few days amid potential interest rate hikes by the Fed and the Bank of England. Even so, the BP stock price has managed to remain above the 25-day and 50-day moving averages, as well as the 50-day and 200-day exponential moving averages. Its Relative Strength Index (RSI) has inched lower but remains in the neutral zone.

Therefore, with an imminent interest rate hike by the Fed, the BP share price is likely to fall further in ensuing sessions. If this happens, bears will be targeting the next support levels at 516p and 473.80p. However, a flip of the resistance at 550.5 p will invalidate this view.

BP Price Chart

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