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BP Expands EV-Charging Network, Buys TravelCenters

 

Friday, February 17, 2023

The news shaping the markets today

Russia again launched missile strikes on Ukraine, hitting critical infrastructure facilities of the country. The safe-haven US dollar index rose this morning.


Thailand’s economy unexpectedly shrank 1.5% in the fourth quarter, missing market expectations of 0.5% growth, which exerted pressure on the THB/USD forex pair.


Singapore’s non-oil domestic exports dipped 25% year-over-year in January, worse than market expectations of a 22% decline, sending the SGD/USD pair lower in forex trading this morning.


US housing starts declined by 4.5% to an annualised rate of 1.309 million in January, sending the Dow Jones index lower by more than 400 points on Thursday.


Brazil’s IBC-Br index of economic activity rose by 0.29% in December, exceeding market estimates of 0.1% growth, which sent the BRL/USD pair higher in forex trading this morning.

 

What’s happening: BP plc announced plans to acquire truck fuelling provider TravelCenters of America Inc.

What happened: The oil giant agreed to pay $1.3 billion for a network of 280 service stations and convenience stores from TravelCenters.

Shares of BP rose slightly, while TravelCenters’s stock jumped sharply, following the acquisition announcement.

Why it matters: Last week, BP had reported better-than-expected results for its fourth quarter, hiked its dividend by 10% to 6.61 cents per share and projected capital expenditure between $16 billion and $18 billion for 2023.

BP has been looking to accelerate its investments in EV charging and bioenergy. The company acquired US biogas producer Archaea for $4.1 billion in 2022 and recently said it plans to invest as much as $1 billion in EV charging across the US by 2030.

Currently, BP has about 22,000 EV-charging points around the world and is aiming for over 100,000 points by 2030.

TravelCenters owns a network of several sites across 44 states in the US, offering services including fuelling, restaurants and truck maintenance. It also sells approximately 150,000 barrels of oil per day, of which 90% is diesel.

The services offered by TravelCenters will help BP expand its offers to EV charging and biofuels.

“While we expect that traditional fuels demand will remain a material part of the energy mix through the decade, demand for lower carbon mobility solutions is growing rapidly,” BP CEO Bernard Looney said.

BP offered $86 per share to buy TravelCenters, which represents an 84% premium to the company’s average trading stock price over the 30 days to Wednesday. The transaction is subject to approval by TravelCenters shareholders.

BP expects the deal to add to its EBITDA (earnings before interest, taxes, depreciation, and amortization) immediately, increasing to about $800 million in 2025.

How shares responded: BP’s shares gained 1.2% to close at $40.95, while shares of TravelCenters jumped 70.8% to settle at $84.43 on Thursday.

What to watch: Investors will keep an eye on the deal and the closing of the acquisition process, which could provide a strong boost to BP’s overall results ahead.

The markets today

The Canadian dollar will be in focus today ahead of producer price inflation data

Context: The CAD/USD forex pair recorded losses on Thursday, declining to a six-day low.

Details: The loonie came under pressure on Thursday as traders assessed the recent US economic data.

The US dollar gained versus a basket of major peers as economic reports increased speculations of the Federal Reserve continuing its hawkish monetary policy for longer than earlier anticipated. However, the US dollar index pared gains later during the session, closing almost flat at 103.86 on Thursday.

US initial jobless claims unexpectedly declined in the latest week, while producer prices increased in January. Producer prices rose 0.7%, the most in seven months, while jobless claims fell to 194,000 last week.

The Bank of Canada, which hiked its interest rates by 25 basis points in January to bring the cash rate to 4.50%, had signalled a pause in rate increases. The country’s annual inflation rate fell to 6.3% in December, the lowest level since February 2022.

A decline in price of crude oil, one of Canada’s major exports, also exerted pressure on the loonie. WTI for March delivery fell 10 cents to close at $78.49 per barrel on Thursday.

The CAD/USD forex pair fell to its lowest level since Friday at 1.3458.

What are expectations: The release of PPI data will remain in focus today, with analysts expecting industrial producer prices in Canada to decline by 0.1% in January, following a 1.1% decline in December. Producer prices in Canada, which rose 7.60% year-over-year in December, are projected to increase 6.8% in January.

Traders will also keep an eye on economic data on foreign investment in Canadian securities and raw materials prices today.

Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 index up by 0.18%, 0.18%, 0.89% and 0.19%, respectively.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD  – 1.0649 and 1.0654 Negative
GBP/USD – 1.1951 and 1.1955 Negative
WTI Crude Oil – 77.98 and 78.26 Positive
Natural Gas  – 2.401 and 2.407 Negative
DAX 40 – 15516.00 and 15552.49 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0654, -0.17%) Dow ($33,677, -0.18%) Brent ($84.61, -0.6%)
GBP/USD (1.1953, -0.29%) S&P500 ($4,085, -0.35%) WTI ($77.98, -0.7%)
USD/JPY (134.69, 0.56%) Nasdaq ($12,412, -0.56%) Gold ($1,837, -0.8%)

What else to watch today

Germany’s producer price inflation, UK’s retail sales, France’s inflation rate, Eurozone’s current account and European Union’s passenger car registrations, Italy’s current account, India’s foreign exchange reserves, US export prices, import prices and Baker Hughes crude oil rigs, Russia’s full year GDP growth, Mexico’s government budget value, as well as China’s foreign direct investment.


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