Core Viewpoint - BP expects to report an after-tax asset impairment loss of $4 billion to $5 billion in its fourth-quarter financial results, primarily driven by its natural gas and low-carbon energy segments, which will not affect core earnings based on reset cost profits [1] Group 1 - The impairment loss is mainly attributed to the natural gas and low-carbon energy business segments [1] - The reported impairment will not impact the core earnings metrics based on reset cost profits [1]

Core Viewpoint - BP is expected to report a significant after-tax asset impairment loss of $4 billion to $5 billion in its fourth-quarter earnings, primarily related to its transition to low-carbon energy [1] Group 1: Performance Expectations - Despite the impairment, BP anticipates that its total upstream oil and gas production will remain stable compared to the previous quarter, with crude oil production holding steady while natural gas and low-carbon energy output is expected to decline [2] - The natural gas and low-carbon energy segment is projected to face a negative impact of $100 million to $300 million on quarterly performance due to price fluctuations outside of Henry Hub [2] - Retail business sales are expected to decline due to seasonal factors, while fuel margins are anticipated to remain flat [2] Group 2: Financial Structure Adjustments - BP expects its net debt to decrease to between $22 billion and $23 billion by the end of the fourth quarter, a significant improvement from $26.1 billion at the end of the third quarter [3] - The company has raised its expected effective tax rate for the full year 2025 from approximately 40% to 42% due to changes in the geographic structure of earnings [3] - The large impairment highlights the challenges and financial costs faced by traditional energy giants in reshaping their asset portfolios amid global energy price volatility and uncertainties in transition pathways [3]

Market Overview - U.S. stock futures declined on Wednesday following a lower close on Tuesday, with major benchmark indices showing a downward trend [1] - The Consumer Price Index (CPI) rose 2.7% year over year in December, matching previous readings and economists' estimates, while core CPI was slightly below expectations at 2.6% [1] Economic Indicators - The 10-year Treasury bond yielded 4.17%, and the two-year bond yielded 3.52%, indicating investor sentiment towards interest rates [2] - The CME Group's FedWatch tool indicates a 97.2% likelihood of the Federal Reserve maintaining current interest rates in January [2] Stock Performance - Major indices showed the following performances: Dow Jones -0.15%, S&P 500 -0.16%, Nasdaq 100 -0.16%, Russell 2000 +0.14% [3] - SPDR S&P 500 ETF Trust (NYSE:SPY) was down 0.15% at $692.73, while Invesco QQQ Trust ETF (NASDAQ:QQQ) declined 0.20% to $625.00 in premarket trading [3] Company Focus - Wells Fargo & Co. (NYSE:WFC) was down 0.81% in premarket trading, with expected quarterly earnings of $1.67 per share on revenue of $21.65 billion [7] - BP PLC (NYSE:BP) dropped 1.84% after announcing potential writedowns of up to $5 billion in its energy transition businesses [7] - WeRide Inc. ADR (NASDAQ:WRD) rose 1.59% after launching the Robotaxi Mini Program "WeRide Go" on Tencent WeChat [7] Analyst Insights - Professor Jeremy Siegel anticipates a strong 2026 driven by productivity growth, with a surprising fourth-quarter GDP growth estimate of 5.4% [10] - Siegel suggests a shift in stock market leadership away from mega-cap technology stocks, predicting double-digit returns from small-cap stocks and non-tech cyclicals [11] Upcoming Economic Data - Delayed reports on U.S. retail sales and producer price index are scheduled for release at 8:30 a.m. ET [14] - Additional economic data, including business inventories and existing home sales, will be released at 10:00 a.m. ET [14] Commodities and Global Markets - Crude oil futures fell by 0.98% to around $60.57 per barrel, while gold prices rose by 0.93% to approximately $4,629.12 per ounce [16] - Bitcoin traded 3.32% higher at $94,969.36 per coin [16] Global Market Performance - Asian markets closed mixed, with India's Nifty 50 and China's CSI 300 indices falling, while Australia's ASX 200, Japan's Nikkei 225, Hong Kong's Hang Seng, and South Korea's Kospi indices rose [17]

Core Viewpoint - BP Plc is expected to record an asset impairment of up to $5 billion in Q4, following a recent CEO change aimed at reversing financial losses [1] Group 1: Financial Performance and Strategy - The impairment charge is primarily related to BP's natural gas and low-carbon businesses, with oil trading performance expected to remain weak for the second consecutive quarter [1] - BP's net debt has decreased, but oil production is expected to remain flat, increasing pressure on the company to maintain its stock buyback pace amid a declining oil price environment [1] - BP's stock price increased by 10% last year, performing nearly on par with Shell, driven by growth in oil and gas production [2] Group 2: Leadership Changes and Market Conditions - The sudden departure of former CEO Murray O'Grady raised market concerns, as BP faced pressure from activist shareholders and had been shifting focus back to fossil fuel operations [1] - New Chairman Albert Manifold believes the pace of strategic transformation is insufficient, leading to the appointment of Meg O'Neill from Woodside Energy as the new CEO [1] - Despite geopolitical risks providing some support for oil prices, Brent crude remains below $70 per barrel, which is critical for BP to achieve its turnaround goals [2] Group 3: Industry Context - Shell and ExxonMobil have also issued warnings about facing significant challenges in Q4 performance, indicating broader industry pressures [3]

Core Viewpoint - BP is expected to record an asset impairment of up to $5 billion in Q4, following a recent CEO change aimed at reversing financial losses [1][4]. Group 1: Financial Performance and Strategy - The impairment primarily affects the natural gas and low-carbon business segments, with the announcement made ahead of the upcoming financial report [1][4]. - BP's oil trading business is projected to underperform for the second consecutive quarter, while crude oil production is expected to remain stable, and net debt has decreased [1][4]. - The company is divesting non-strategic assets to help reduce debt levels, which is critical in the current low oil price environment [1][4]. Group 2: Leadership Changes - Murray Auchincloss was abruptly dismissed amid pressure from activist shareholder Elliott Investment Management, following years of unsuccessful low-carbon investments [1][4]. - Albert Manifold, the new chairman, indicated that the pace of strategic adjustments was insufficient, leading to the appointment of Meg O'Neill from Woodside Energy as the new CEO [1][4][5]. Group 3: Market Conditions - BP's stock price increased by 10% last year, aligning closely with Shell's performance, making it one of the best-performing stocks among the top five oil giants [6]. - Despite a strong third-quarter performance driven by oil and gas production growth, the current global oil market appears to be leaning towards oversupply, posing risks to BP's transformation efforts [6]. - The price of Brent crude oil remains below the $70 per barrel threshold necessary for BP to achieve its transformation goals, despite geopolitical risks providing some price support [6].

Core Insights - The article discusses the role of Steven Goldstein in covering financial markets in Europe, emphasizing his focus on global macro and commodities [1] Group 1 - Steven Goldstein is based in London and is responsible for MarketWatch's coverage of financial markets in Europe [1] - His previous role was as Washington bureau chief, where he directed MarketWatch's economic, political, and regulatory coverage [1] - The article encourages following Steven Goldstein on Twitter for updates on financial markets [1]

Group 1 - The energy company has indicated that its fourth-quarter oil-trading performance is expected to be weak, which will negatively impact earnings [1] - This warning aligns with a similar statement made by British peer Shell, suggesting a broader trend in the industry regarding oil trading performance [1]

Core Viewpoint - BP expects to record impairments between $4 billion to $5 billion in the fourth quarter, primarily related to its energy transition businesses, alongside weak performance in oil trading [1] Group 1: Financial Performance - The anticipated impairments of $4 billion to $5 billion are significant and indicate challenges within BP's energy transition segment [1] - Weakness in oil trading suggests potential difficulties in the company's traditional revenue streams [1]

Core Viewpoint - The establishment of the joint venture Etlas between Cargill and BP aims to produce sustainable aviation fuel (SAF) and renewable diesel (RD) from oilseed crops, addressing the growing demand for biofuel raw materials in the coming years [2][3] Group 1: Joint Venture Details - Cargill and BP have formed a 50-50 joint venture named Etlas, focusing on producing oilseed crops such as canola, mustard, and sunflower for biofuel raw materials [2] - Etlas plans to achieve an annual production capacity of 1 million tons of raw materials by the mid-2030s, with an expected output of over 800,000 tons of biofuels starting in 2027 [2] - The joint venture will utilize existing farmland by rotating these intermediate crops between main crop planting seasons, improving soil health and providing new income sources for farmers without requiring additional land [2] Group 2: Market Demand and Strategic Goals - Industry forecasts indicate that global SAF demand is expected to grow from approximately 1 million tons in 2024 to around 10 million tons by 2030, while RD demand may increase from about 17 million tons to 35 million tons [2] - Etlas aims to provide a reliable and scalable supply of raw materials to meet this increasing market demand for sustainable fuels [2] - The joint venture is described as a "light-asset" partnership that enhances both companies' strategic flexibility and competitiveness within the biofuel value chain [3]

Investment Climate - Britain is becoming increasingly unattractive for investment, likened to Venezuela due to Labour's stringent net zero policies affecting the oil industry [7][8] - The chief executive of engineering group Hunting criticized the UK government's approach to carbon reduction, suggesting it has made the country "uninvestable" [7][8] Oil Market Dynamics - Oil prices have surged to two-month highs, with Brent crude reaching approximately $66 per barrel and WTI exceeding $61, driven by geopolitical tensions and drone attacks on oil tankers in the Black Sea [3][6][26] - The price of Brent crude rose by 2.9% following Donald Trump's comments urging Iranians to take action against their regime, contributing to market volatility [6][26] - Protests in Iran have led to a 14% increase in European gas prices over three days, marking the largest rise since March [5][54] Stock Market Reactions - US stocks experienced a decline, with the Dow Jones Industrial Average falling by 0.7% and the S&P 500 and Nasdaq both down by 0.2% amid persistent inflation concerns [1][28] - Oil companies such as BP, Shell, Chevron, and ExxonMobil saw stock price increases as oil prices rose, contributing to a boost in the FTSE 100 index [2][9][56] Geopolitical Influences - Geopolitical risks are at an all-time high, with analysts predicting potential spikes in oil prices due to ongoing tensions in the Middle East [4][26] - The US has imposed 25% tariffs on goods from countries trading with Iran, which could significantly impact global oil supply and prices [16][73]