Shares of BHP Billiton Limited [ASX:BHP] lost today over 1.26%. Shares went from trading at $26.89 yesterday — the highest since February — to as low as $26.55, before recovering to $26.86 at time of writing.
Why did the BHP Share Price lose 1.26%?
Oil prices have fallen in the wake of Hurricane Harvey’s devastation in Texas. West Texas Intermediate prices fell 2.7% over the weekend to close at US$46.57. Hurricane Harvey is the most powerful hurricane to hit Texas — the state with the second largest economy in the US, one rich in oil and gas — in 50 years.
The area has been affected by intense rainfall and winds that has caused flash flooding and a lot of damage. It has also forced refineries to close, which could see a reduction in the demand for American crude oil. BHP had to suspend oil and gas drilling last Friday, but has slowly resumed operations this past Monday.
One of many setbacks for BHP
Hurricane Harvey is the latest of the many setbacks to hit BHP’s US shale assets. The company has finally decided to sell its onshore US shale assets after pressure from shareholders.
After investing around US$20 billion to buy the assets during the US shale boom, they have now declined to a book value of just US$14 billion on a net basis. Jac Nasser, BHP’s exiting chairman, has admitted they bought the assets at the wrong time.
But economic whirlwinds are coming to Australia shores as well. Australia potentially faces its own economic disaster in the years ahead. Yet there are ways to come out ahead if you know how to play your cards right. For details, go here.