Ouch – the BP (LSE: BP) share price has simply fallen once more. It’s as we speak’s greatest FTSE 100 faller, plunging virtually 5% this morning, on a day when many of the index bought off to a flying begin.

Commodity shares comparable to Anglo American and Glencore are racing out of the traps as buyers have a good time extra Chinese language stimulus, however BP shares are heading backwards. So is the Shell share price. It’s as we speak’s second greatest faller.

That’s a blow for me as a result of solely every week in the past I declared BP to be the discount of the millennium. I put my cash the place my mouth is, and purchased it a number of days later.

Evidently, I haven’t carried out properly. So what’s up?

The oil price is underneath stress

Saudi Arabia has apparently given up on makes an attempt to drive the oil price again up to $100 a barrel, and is ramping up manufacturing to guard market share. This can be a tacit admission that its longstanding post-war position has modified. Saudi is not the worldwide swing producer. That crown now belongs to the US, because of shale. It’s an enormous strategic shift.

It’s not the tip of the world for BP. Brent crude remains to be above $72 a barrel, whereas it may break even with oil at $40 or probably even $30. I can console myself with the dividends I’ll be getting, as BP now has a bumper trailing yield of 5.87%.

I’m interested in one factor, although. One of many greatest worries about investing in BP, or any vitality large, is that the world is supposedly racing to finish its dependency on fossil fuels.

BP might fall even additional

BP has struggled to maintain tempo with the vitality transition leaving it weak as renewables take over. But right here we’re, and BP is struggling as a result of the world is pumping increasingly more oil, quite than much less.

Traders like me should ignore huge macro elements like that. A couple of years in the past, BP was alleged to fall due to the ‘peak oil’ scare. As an alternative of operating out, we’re swimming within the stuff. But BP is struggling. Who knew that will occur? I didn’t.

I’ll keep on with what I do know. BP has a protracted and proud observe report. Its shares are down 25% in a 12 months. They commerce at simply 6.06 instances earnings, a fraction of the FTSE 100 common P/E of 15.4 instances. The vitality sector is famously cyclical. Finest to purchase when shares are down. This seems like a possibility to me.

Brokers following BP have set a median one-year price goal of 523.8p, up 36.23% from as we speak’s 382p. Frankly, its shares might go anyplace. I might simply see it ending the 12 months under 350p however the world nonetheless runs on oil and someday, BP will bounce again. I’m aiming to purchase extra of its shares earlier than it does.