Market Spotlight: BP Outlines Strategy Shift Following Record profits

Another big oil company, another set of record earnings. This time it's the London- listed BP, as the oil giant has seen its shares rise three and three quarter percent out of the gate this morning as a result of the news that's come through where the company has said that profits have doubled to a record $27.7 billion lifted by a surge in energy prices seen since the Russian invasion of Ukraine in the fourth quarter.

Record Profits

Shares in oil giant BP are trading higher across the European morning today on the back of a stellar set of earnings. The group posted Q4 EPS of $21.95, just a touch under the $22.90 the market was looking for. However, revenues were seen higher than forecasts at $5.75 trillion vs $4.59 trillion expected. On the year as whole, BP posted record profits of $27.65 billion, its highest returns in 14 years. As a result of these gains BP announced a 10& increase in the dividend along with a $2.75 billion share buyback.

Increased Taxation

Record profits from energy companies have drawn plenty of criticism given the cost-of-living crisis in the UK. Last year, the government announced a new windfall profits tax on energy firms making excess profits from the spike in energy prices seen in response to the Russian invasion of Ukraine. BP noted that it will pay around $2.2 billion in UK tax with around a third of that satisfying the governments new energy tax.

Green Strategy in Question

The spike in profits appears to have impacted the groups outlook and strategy. Looking ahead, BP noted that it will not be looking to reduce fossil fuel output by 2030 by as much as expected. BP had been among the first energy giants to announce a shift towards greener energy, outlining plans to cut emission by 50% by 2050. However, it now said it will target a 20-30% reduction, citing the need to keep up with global demand for fossil fuels.

Technical Views

BP

For now, BP shares continue to hold in range between the 456.80 level support and the 504.45 resistance, underpinned by the local rising trend line. In line with the broader bull trend, the focus is on a n eventual break higher while price holds above the support level. However, bearish divergence on momentum studies is worth keeping an eye on. Any downside break of 456.80 opens the way fo r a test of 421.05 next.