Here's why the Beach Energy (ASX:BPT) share price is up more than 50% over the past month

The Beach Energy Ltd (ASX: BPT) share price is up more than 50% over the past month. Here's why this ASX oil company is soaring

| More on:
asx share price rise represented by red paper plane flying away from other white paper planes

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Beach Energy Ltd (ASX: BPT) share price is up 1.07% at the time of writing today to $1.89 a share. That doesn't sound too impressive on its own, but consider this: Beach shares are now up more than 51% over the past month alone.

In fact, since 2 November, the Beach share price is up an extraordinary 64.3%, making it one of the best performers on the S&P/ASX 200 Index (ASX: XJO) in the month of November.

So what's going on here to prompt such enthusiastic buying pressure?

Beach shares surf an oil wave

There are only two likely reasons why Beach shares have performed the way they have over the past month or so: higher oil prices and the expectation of even higher oil prices.

Since late October, the price of Brent crude oil has climbed from under US$38 a barrel to the current level (according to Bloomberg) of US$49 a barrel. That's a rise of close to 30% in just over a month. It's also the highest level crude oil has traded at since early March, when the oil market was in freefall due to the unfolding coronavirus pandemic.

So we can establish rising oil prices are a factor here. But what of sentiment?

Where is oil going next?

Many commentators are predicting that oil hasn't finished climbing just yet. A broker note from Goldman Sachs last month shows the investment bank is pricing in oil at US$50–$55 a barrel in 2021.

Another investment bank is even more bullish. As my Fool colleague Brendon Lau covered last month, Credit Suisse reckons that Brent crude could go as high as US$196 a barrel next year, depending on whether the Organization of the Petroleum Exporting Countries (OPEC) decides to maintain agreed cuts in oil production. Even if OPEC relaxes production to pre-pandemic levels, Credit Suisse still sees oil at US$80 a barrel, with US$65 a barrel a base case scenario.

These predictions are still just predictions, and depend a great deal on external factors, such as the rollout of a successful coronavirus vaccine candidate, and rebounds in economic growth across the global economy. But even so, it seems things are looking up for oil overall.

That's likely the reasons behind this company's stellar share price performance over the past month or so. We can also see similar performances from other ASX oil companies like Woodside Petroleum Ltd (ASX: WPL) and Oil Search Ltd (ASX: OSH), which lends credence to this thesis.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors started the week off in a good mood today.

Read more »

Excited couple celebrating success while looking at smartphone.
Share Gainers

Why Bellevue Gold, Bubs, Clarity Pharmaceuticals, and Regal Partners shares are rising today

These shares are starting the week on a positive note.

Read more »

Two people lazing in deck chairs on a beautiful sandy beach throw their hands up in the air.
Travel Shares

Guess which ASX All Ords travel stock just rocketed 17% on an earnings upgrade

Investors are piling into the ASX All Ords travel stock today. Here's what's happening.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Dimerix, Newmont, Regal Partners, and Titomic shares are storming higher

These shares are having a good finish to the week. Let's see why.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why Fortescue, Lynas, PEXA, and Regis Healthcare shares are charging higher

These shares are having a strong session on Thursday. But why?

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Gainers

Why Capricorn Metals, Insignia, Perseus Mining, and Qoria shares are storming higher

These shares are having a strong session on Tuesday. But why?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Amaero, AMP, Block, and South32 shares are racing higher today

These shares are starting the week on a positive note. But why?

Read more »