BP Shares Plummet 3.1% Amid Castrol Sale Talks and Sector Volatility

Summary
• BP’s stock plunges 3.08% to $36.085, trading near intraday low of $36.08
• Stonepeak Partners emerges as top bidder for Castrol at $8B+ valuation
• BofA downgrades BP to Underperform, citing asset sale uncertainty
• Energy ETFs rally as diesel prices hit 16-month highs

BP’s sharp intraday decline reflects investor jitters over the potential $8 billion Castrol divestiture and broader sector dynamics. While energy ETFs gain traction from surging diesel prices, BP’s stock struggles amid mixed signals from strategic shifts and analyst skepticism. The stock’s 3.1% drop underscores the tug-of-war between asset sale optimism and operational headwinds.

Castrol Sale Talks Spark Investor Uncertainty
BP’s intraday selloff is directly tied to the Financial Times’ report that Stonepeak Partners is in advanced talks to acquire the Castrol lubricants business for over $8 billion. While the deal aligns with BP’s $20 billion asset sale target by 2027, initial bids below $8 billion and the absence of a finalized agreement have spooked investors. The uncertainty over Castrol’s valuation—pegged at $10 billion by analysts—has amplified volatility. Additionally, BP’s recent exit from Oman’s green hydrogen project and its Arizona EV charging hub rollout have not offset concerns about the company’s transition strategy, further pressuring shares.

Energy Sector ETFs Gain as Diesel Prices Surge
While BP’s stock falters, energy ETFs like XLE and IYE rise on surging diesel prices driven by EU sanctions, refinery outages, and Ukraine’s strikes on Russian infrastructure. These factors have pushed diesel crack spreads to multi-year highs, boosting refining margins for companies like ExxonMobil and Chevron. BP’s decline, however, is not directly linked to sector gains, as its refining exposure is smaller compared to peers. The divergence highlights BP’s unique challenges in balancing asset sales with its transition to low-carbon energy.

Options and ETFs to Hedge BP’s Volatility
• 200-day average: 32.57 (well below current price)
• RSI: 60.16 (neutral zone)
• MACD: 0.426 (bullish divergence)
• Bollinger Bands: 35.36–37.49 (price near lower band)

BP’s technicals suggest a short-term bearish bias but a longer-term bullish trend. For hedging, consider bold BP20251212P36 (Put, $36 strike, 18.31% IV, 4054.95% leverage ratio, 0.405 gamma, $2569 turnover). This contract offers high leverage and liquidity, ideal for a 5% downside scenario where payoff would be $0.92 per share. Alternatively, bold BP20251212C36.5 (Call, $36.5 strike, 20.44% IV, 138.81% leverage ratio, 0.341 gamma, $1979 turnover) provides upside exposure if the stock rebounds above $36.725. Energy ETFs like bold XLE and bold IYE offer sector diversification amid diesel-driven momentum.

Backtest BP Stock Performance
It looks like the back-test engine aborted because the event-date file we generated contained no qualifying events. The empty list triggered an internal error (“min() arg is an empty sequence”).Root cause • When we extracted dates we required both 1) intraday plunge ≥ 3 % (plunge_pct ≤ –0.03) and 2) the flag is_intraday_plunge = 1. In BP’s data set the flag was never 1, so the filter returned zero dates.Proposed fix Remove the second filter and keep the straightforward rule: “Every trading day where intraday drop from the day’s high to low is at least 3 %.”If that meets your intent I’ll:1. Re-generate the event-date file with the revised rule. 2. Re-run the event back-test engine. 3. Deliver the visualized results.Please let me know whether to proceed with that adjustment or if you’d like any other criteria.

BP’s Crossroads: Asset Sales vs. Strategic Clarity
BP’s stock faces a critical juncture as the Castrol deal’s outcome looms. While the energy sector gains from diesel price surges, BP’s mixed signals on its transition strategy and asset sales have left investors cautious. The stock’s support at $35.36 and resistance at $37.49 will be pivotal. With bold Exxon Mobil (XOM) up 0.3%, sector momentum remains intact. Investors should monitor Stonepeak’s bid progress and BP’s guidance on its $20 billion target. A break below $35.36 could trigger further selling, but a rebound above $36.725 may reignite optimism. Act now: Watch for $35.36 support or $37.49 resistance breakout.