Business | Oil & Gas
BP in biggest slump in six years as oil futures decline
BP, Europe's second-largest oil company, slumped the most in almost six years in London trading as crude prices extended their decline. Royal Dutch Shell, the continent's biggest producer, had the biggest drop in eight months.
- Bloomberg
- Published: 00:43 October 7, 2008
Amsterdam: BP, Europe's second-largest oil company, slumped the most in almost six years in London trading as crude prices extended their decline. Royal Dutch Shell, the continent's biggest producer, had the biggest drop in eight months.
BP slid as much as 35.75 pence, or 7.6 per cent, to 432 pence, the steepest intraday decline since October 29, 2002. The stock was at 444.25 pence as of 9:49am local time.
Shell's Class-A shares in London lost as much as 5.8 per cent to 1,533 pence, the most since January 21, and were last at 1,540 pence.
Oil futures fell for a fourth day in New York as the credit crisis deepened, adding to concerns that global economic growth will slow and reduce demand for fuels.
Crude for November delivery retreated as much as $4.81 to $89.07 a barrel in electronic trading on the New York Mercantile Exchange. Futures have fallen 38 per cent from a record $147.27 on July 11.
If oil prices slipped below $80 a barrel next year, BP would retain its "hold" rating while Shell would be cut to "hold" from "buy," Jason Kenney, an Edinburgh-based analyst at ING Wholesale Banking, said in a research note yesterday.
"Given the uncertainty for sustainability of earnings and the likely profitability squeeze, we would see little to be optimistic about for the oil sector as a whole in such a scenario," Kenney said.
Total SA, Europe's third-largest oil company, fell 5.7 per cent to a three-week low of 40.20 euros. The oil and gas industry subgroup on the Dow Jones Europe Stoxx 600 fell 5.5 per cent.
Shell has lost 26 per cent this year, while BP has tumbled 28 per cent.
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