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

A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors endured a rough Friday to close the trading week today.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Pointsbet, Qantas, Serko, and Yandal shares are pushing higher today

These shares are avoiding the market selloff today. But why?

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best performing ASX 200 shares in October

Did you own the best performers on the index last month? Here they are.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors copped another rough session this Thursday.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

Mineral Resources share price rockets 16% on $1.1 billion news!

ASX 200 investors appear thrilled with Mineral Resources' latest news.

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing Wednesday session for ASX investors today...

Read more »

Hiker man backpacker with hands up in the summer mountains with cloudy sky.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors enjoyed anther positive session this Tuesday.

Read more »

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

Why Firefly, Premier Investments, Serko, and Zip shares are roaring higher today

These shares are catching the eye with strong gains on Tuesday. But why are they rising?

Read more »