Q:

What factors cause fluctuation in the price of BP shares?

A:

Quick Answer

Some factors that may cause fluctuation in the price BP shares include the general supply and demand of the oil market, the strength of the economies of the countries in which it does business and its overall earnings within each quarter. Major disasters, such as the BP oil spill in 2010, also affect the stock prices as they reduce confidence in the company.

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Full Answer

As BP is an oil and energy company, one of the most noticeable factors that affects its stock prices is the cost of drilling for oil, which affects the way it sets its sale prices, allocates its funds and determines the role it plays in the countries from which it obtains the oil. The demand for oil and gasoline also contributes to changes in stock prices, with high demand increasing its price and low demand decreasing it. However, if the need increases but BP is not able to meet the demand, it may lose profits and thus experience a decrease in share price.

The company's public perception also greatly affects its stock prices, with news of disasters or ecological damage significantly lowering prices. When the company's oil rig spilled oil in the Mexican Gulf Coast in 2010, many shareholders sold their stock in the company because the negative attention and cost of repairing the damage meant that the company was unlikely to operate with the same level of profit as before the spill.

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