The BHP Billiton Limited (ASX: BHP) share price is up 3.9% today and has now cracked the $20 mark it last saw in November last year. In late afternoon trading, shares were changing hands at $20.43.
Some readers may remember BHP's share price hitting a 10-year low of just $14.06 on January 21, this year. Since then, the share price has had a bumpy ride to gain more than 45% to its current level.
Much of that has had to do with a recovery in commodity prices, particularly iron ore and oil. In the 2015 financial year, BHP generated 74% of earnings before interest and tax (EBIT) from iron ore and petroleum, showing how important those two commodities are to the giant resources company.
Iron ore recently hit US$60 a tonne from a low of US38 a tonne late last year, while Brent Crude oil has also recovered from sub-US$30 a barrel prices earlier this year to US$43.15 a barrel currently.
However, the iron ore price is expected to fall from its current level in the second-half of 2016, and I wrote last month that oil prices may have bottomed, although will remain in oversupply until sometime in 2017.
Foolish takeaway
On that basis and given those risks, it might not be a smart decision to invest in BHP now.
