The US Power Data Administration (EIA) not too long ago launched its November power outlook report. Inside it, the research group forecasts the place it imagine completely different commodity costs will probably be over the approaching 12 months. Primarily based on the newest figures for oil, I believe the BP (LSE:BP) share price may have a troublesome 12 months forward.

Robust rally unlikely

The EIA forecasts Brent crude oil at $73.02 a barrel in This autumn 2025. This contrasts the present price of $72.44. Put one other method, if we fast-forward a 12 months, there won’t be a lot of a distinction within the oil price. The EIA flags up “at least two main sources of oil price uncertainty – the future course of the ongoing Middle East conflict and OPEC+ members’ willingness to adhere to voluntary production cuts”.

In fact, I should be cautious when studying by experiences like this. There’s no assure the forecasts will probably be right. Nonetheless, it’s fascinating to construct an knowledgeable opinion by taking into consideration these ideas.

Most buyers aren’t energetic oil merchants. Nonetheless, the oil price swings can actually affect the share price of shares like BP which can be closely concerned in oil and different commodities.

How the inventory’s impacted

Over the previous 12 months, the BP share price is down by 19%. Over the identical interval, oil’s down 12%. So there’s a transparent connection right here. BP makes a superb portion of income from the manufacturing and sale of oil. So if the price falls, income for BP falls as it might’t promote it for as a lot because it may a 12 months again.

If income falls, revenue doubtless drops as properly. This then impacts the share price as buyers try to discover higher alternatives elsewhere. Or the dividend would possibly get minimize as a consequence of decrease income, scaring away revenue buyers.

Within the 9 months thus far this 12 months, revenue is available in at $2.34bn. This can be a drop from the $14.86bn from the identical interval in 2023. So my concern right here is that if we fast-forward a 12 months and the oil price is principally the identical, I’d anticipate income to be comparable as properly. If that’s the case, I don’t see a fabric rally within the BP share price from right here.

Different components concerned

It’s true that the inventory may rally from various factors. For instance, the newest report confirmed how internet debt has risen to $24.26bn from $22.32bn. If the enterprise focuses on lowering internet debt within the subsequent 12 months, this might assist to share price to rally as buyers are much less involved in regards to the debt pile.

Additional, BP’s concerned in different merchandise, not simply oil. This contains pure gasoline, biofuels and renewable power sources. So if one in all these areas does very properly within the coming 12 months, it may assist the inventory.

But in the end, I really feel BP shares could possibly be in for a troublesome 12 months forward, until one thing adjustments to spark a rally within the oil price. So I gained’t be investing proper now.