Shareholders of BHP Billiton Limited (ASX: BHP) enjoyed some reprieve on Wednesday when their shares rose an impressive 5.6%, but that relief didn't last long. The shares are back trading at just $16.52, down almost 3% today, and are once again threatening to fall to a new 10-year low.
There are a couple of reasons why BHP's shares might be falling so heavily today, aside from the obvious fact that the broader S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has also fallen 0.5% with many blue chip shares sitting in the red for the session.
The first reason could be the 0.8% decline in oil prices overnight which has Brent oil now changing hands for US$37.09 a barrel. The Australian Financial Review highlighted that this is within US$1 of its 2004 low, while a number of economists expect it to continue falling.
Unlike oil, the iron ore price rose overnight to US$39.43 a tonne. The problem is, the relief isn't expected to last long with Goldman Sachs revising its forecasts for the commodity. It expects it to trade for less than US$40 for the next three years and to average just US$35 a tonne in 2017 and 2018.
To top it off, the investment bank cut its price target on the 'Big Australian's' shares by 25% to $18. The Fortescue Metals Group Limited (ASX: FMG) share price also fell 5.2%, while Rio Tinto Limited's (ASX: RIO) shares dropped 3%.
While some investors are no doubt tempted to buy BHP's shares at their current price, there could still be further falls to come. Personally, I'll likely be holding off for a while yet before I hit the "buy" button.
