With BP and Shell’s share prices at their lowest for 25 years, investors are seeing them as potential bargains.
BP and Shell, which both also produce industrial lubricants like slideway oil, have certainly had a challenging year. The lockdowns and restrictions brought in around the world to deal with the coronavirus pandemic caused the demand for oil to plummet, leading to oil prices even going negative at one point. While the markets have since stabilised around the $40 per barrel mark, many operations will struggle to break even at that price. Both companies’ shares are currently trading at under half the price they were at the beginning of the year.
Despite this, investment platform Hargreaves Lansdown says it is seeing evidence that suggests investors are regaining confidence in the two oil majors and seeing them as a promising buy. They were both among the platform’s 10 most bought shares.
Hargreaves Lansdown’s Susannah Streeter, a senior investment and markets analyst, said that while:
“Both firms are still languishing at 25-year lows, their price has ticked up very slightly over the past few days due to renewed investors interest. It indicates that investors are perhaps going bargain hunting, hopeful that the companies’ prospects will rebound, glimpsing light at the end of the coronavirus tunnel.”
Streeter added that while both companies clearly have huge challenges ahead as they push more into renewable energy, investors have been somewhat encouraged by reassurance that oil and gas operations will not be entirely abandoned in the foreseeable future.