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Shell and BP badly hit by oil price slump

Screen Shot 2014-10-28 at 11.51.59The UK’s two oil majors, Shell and BP, have been badly hit, dropping 13% and 12% respectively over the past three months.

Investment Week article by Dan Jones, Laura Dew and Julia Rampen: “Oil majors cast shadow over UK dividends after price slump”: 08 Dec 2014

Extracts

Brent crude oil prices have fallen 40% since June, dropping from $114 a barrel to below $70 last week, as demand weakens and suppliers decline to cut production.

The UK’s two oil majors, Shell and BP, have been badly hit, dropping 13% and 12% respectively over the past three months.

Other managers are also becoming concerned about the impact a lower- for-longer oil price will have on the largest oil stocks’ balance sheets, and the implications for the wider market, as the sector represents 15% of total UK payouts.

Richard Buxton, manager of the Old Mutual UK Alpha fund, who holds 4.4% of his portfolio in Shell, said a lower oil price would be “an area of concern for some holdings,” but urged caution.

“It would take a lot to undermine Shell’s dividend paying capacity, [but] clearly there will be a lot of focus on this area in the coming weeks,” he said.

SOURCE

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