Like many major European stocks, BP also trades in the US under an ADR structure, where it experienced a volatile session overnight, jumping ~10% early in the session on rumours that it was in the cross hairs of Shell (SHEL US). Two European energy goliaths are catching the news, with the latest snippet being Shell categorically stating, “This is further market speculation. No talks are taking place.” When there is smoke, there is generally fire and we think there is some truth to these rumours, but at current prices, it feels a tough call.
- We expect further consolidation in the energy space, similar to that being experienced by the gold sector.
MM is neutral towards BP
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