BP and Shell Share Prices Both Suffer As Oil Prices Dip On Wednesday

BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL) share prices dropped on Wednesday, following a drop in oil prices, that impacted the sector. This marks the second day of declining crude valuations on what is currently an upward trend in 2024.

Brent crude, the global benchmark for oil prices, dipped by 0.69%, settling at US$86.63 a barrel. Concurrently, West Texas Intermediate, the key U.S. oil marker, experienced a 0.62% drop to US$81.00 a barrel.

BP has dropped 1.23% and Shell dropped 1.27% to end the day in the red, despite trying to rally after the larger early morning dip.

This downward movement in oil prices came amidst market anticipations of a climb in U.S. crude oil inventories, projected to surge by a voluminous 9.3 million barrels, according to recent data. The build-up in oil stocks implicitly signals a slackening demand or a bloated supply environment in the sector.

OPEC+ Not Cutting Output

Adding to the bearish sentiment, signs emerged indicating that the leading oil cartel and its allies—OPEC+, which accounts for about 40% of the world's oil supply—may not enforce additional output cuts at their impending meeting.

Earlier, the group had deliberated over an oil production decrease, implementing a significant cutback of 2.2 million barrels per day. However, further curtailments seem to be tabled for discussion until the summer, leaving the markets to grapple with current supply levels until then.

Investors and industry watchers are now gazing toward the upcoming moves of OPEC+ with heightened caution. The cartel's decisions can significantly influence global oil inventories and prices, echoing widespread consequences across energy portfolios and international markets.

The coming summer months may unveil whether the group will turn the tides with further production cuts or maintain the status quo, continuing to test the resilience of oil prices and the stability of companies like Shell and BP.