BP Falls Most in Six Years as Oil Futures Decline

By Fred Pals

Oct. 6 (Bloomberg) -- BP Plc, Europe's second-largest oil company, slumped the most in almost six years in London trading as crude prices extended their decline. Royal Dutch Shell Plc, the continent's biggest, fell the most since combining its Dutch and U.K. parent companies in 2005.

BP dropped as much as 35.75 pence, or 7.6 percent, to 432 pence, the steepest intraday decline since Oct. 29, 2002, and was at 440 pence as of 2:51 p.m. local time. Shell's Class-A shares in London lost as much as 6.5 percent to 1,523 pence, the most since July 15, 2005, and traded last at 1,540 pence.

Oil futures fell for a fourth day in New York as the credit crisis deepened, adding to concerns that global economic growth will slow and reduce demand for fuels. Crude for November delivery retreated as much as $4.81 to $89.07 a barrel in electronic trading on the New York Mercantile Exchange. Futures have fallen 38 percent from a record $147.27 on July 11.


If oil prices slipped below $80 a barrel next year, BP would retain its ``hold'' rating while Shell would be cut to ``hold'' from ``buy,'' Jason Kenney, an Edinburgh-based analyst at ING Wholesale Banking, said in a note today. ``Given the uncertainty for sustainability of earnings and the likely profitability squeeze, we would see little to be optimistic about for the oil sector as a whole in such a scenario.''

Total

Total SA, Europe's third-largest oil company, fell 5.9 percent to a three-week low of 40.12 euros. The oil and gas industry subgroup on the Dow Jones Europe Stoxx 600 fell 5.5 percent. Repsol YPF, the largest energy company in Spain, fell the most in over a month, dropping 6.6 percent, to 19.35 euros. The stock traded at 19.55 euros at 3:08 p.m. in Madrid.

Eni SpA, Italy's largest oil company, fell as much as 8.4 percent, the most in more than seven years, after ING, JPMorgan Chase & Co. and UBS AG cut their price targets. The shares traded down 1.32 euros, or 7.2 percent, to 17.08 euros at 3:08 p.m. in Milan. SBM Offshore NV, the world's largest producer of floating oil production platforms, dropped the most in a week, losing 1.14 euros, or 7.9 percent, to 13.35 euros. SBM traded at 13.38 euros at 3:08 p.m. in Amsterdam.

Shell has lost 26 percent this year, while BP has tumbled 28 percent. Total is down 29 percent. BP reports third-quarter earnings Oct. 28, followed by Shell on Oct. 30.

In terms of market value, Shell has been bypassed by Johnson & Johnson and JPMorgan Chase & Co., according to Bloomberg data. Exxon Mobil Corp. is the world's largest company in market value.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net