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The slump in oil prices so far this week has dragged down shares in the top UK-based oil and gas supermajors, Shell and BP, with their stock falling on Tuesday and pushing London's main FTSE 100 index in the red.
As oil prices fell by more than 3% on Monday and continued to drop early on Tuesday, shares in BP and Shell also slumped in London today.
BP (LON: BP) was down by 3.7%, and Shell's (LON: SHEL) stock had dropped by 2% as of 2 p.m. in London on Tuesday.
As major constituents of the FTSE 100 index, the supermajors dragged the entire index down.
BP's shares were also weighed down by S&P Global Ratings revising down its outlook on the supermajor to 'stable' from 'positive', due to a slower-than-expected reduction in debt. According to the rating agency, the new cash allocation strategy at BP is not expected to meaningfully reduce its debt.
The shares in the supermajors and other oil companies have been tracking the losses of international crude oil prices this week.
The Brent Crude price slumped on Monday below the $80 per barrel threshold, for the first time since February, after OPEC+ confused the market with its production decision this weekend and bearish sentiment continued to build about economic weakness ahead, which could affect oil demand.
After losing more than 3% on Monday, oil prices continued to slide on Tuesday, and Brent Crude was down by nearly 2% at $76.82 per barrel as of 9:25 a.m. EDT, while the U.S. benchmark, WTI Crude, had slumped by 2.09% at $72.67.
Commenting on OPEC+ rolling over part of the cuts into 2025, ING's commodities strategists Warren Patterson and Ewa Manthey said on Tuesday,
"While the extension of additional voluntary supply cuts into 3Q24 leaves the market in deficit over the upcoming quarter, the gradual return of 2.2m b/d of supply from October 2024 through to September 2025, in addition to a 300k b/d higher production target for the UAE, risks leaving the market in surplus through 2025."
By Charles Kennedy for Oilprice.com
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