BP (LON: BP) share price regained momentum this week, helped by the vibrant crude oil market and heightened M&A deal rumours. The stock jumped to a high of 531p on Friday, its highest swing since October 27th last year.

Crude oil prices and buyout rumours

BP’s stock has joined the other energy companies in a strong bull run this year as investors focused on the energy sector. Brent, the global benchmark, jumped to a high of $91 this week, its highest point in months.

Analysts are bullish on the price of crude oil, with some expecting that it will jump to $100 in the next few weeks. The main issue is that geopolitics could impact oil’s logistics and global supply. 

BP, like other oil and gas companies thrive when oil price is in an upward trend, which explains why most of them have jumped recently. The SPDR Energy ETF (XLE) has jumped to a record high because of this.

Analysts believe that BP’s revenue and profitability will bounce back this year after facing major headwinds in Q4. Its reported profit for the quarter stood at $0.4 billion as the underlying replacement cost profit was $3 billion.

Meanwhile, some analysts believe that BP will be a good acquisition target if the energy prices continue rising. We have had several important big acquisitions in the industry in the past few months.

Exxon Mobil acquired Pioneer Natural Resources in a $59.5 billion deal while Chevron acquired Hess for $60 billion. BP has a market cap of over £90 billion, making it a pricey purchase.

A report by Reuters noted that Adnoc, made preliminary discussions to acquire the company, in what would have been the biggest energy M&A the energy sector after Exxon merged with Mobil in a $81 billion deal. 

Still, a BP acquisition would be difficult to engineer because of UK regulations. I don’t think that the government would be comfortable letting go the company, especially to a company from the Middle East. For one, the government has resisted the purchase of The Telegraph by a UAE company.

At the same time, a buyout by an American company could also attract regulatory scrutiny because of its size. While the company has scaled down its US operations, it still has over 30,000 employees and it makes over $8 billion in investments in the country.

Still, any BP buyer would receive an undervalued company that makes billions of dollars in free cash flow. BP trades at a cheap PE multiple compared to the likes of Exxon and Chevron.

BP share price forecast

(Click on image to enlarge)

BP chart by TradingView

The daily chart shows that the BP stock price has been in a strong bullish trend in the past few months. It has now moved to level six of the Murrey Math Lines, which is known as the strong pivot and reverse.

The stock sits above the 50-day and 100-day Exponential Moving Averages (EMA), meaning that bulls are still in control. Also, the Relative Strength Index (RSI) and the Stochastic Oscillator have moved above the overbought level. 

BP shares are also nearing the crucial resistance point at 541.5p, its highest swing in February and October 2023. Therefore, a move above that level will point to more upside, with the next point to watch being at 600p, the extreme overshoot level of the Murrey Math Lines tool.

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