Here's why the BHP Billiton Limited share price has jumped 5.4% today

BHP Billiton Limited's (ASX:BHP) shares are trading for just under $17 each right now.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of BHP Billiton Limited (ASX: BHP) have continued to rise today, lifting another 5.4% and adding billions of dollars back to the miner's market value. The shares are now trading for $16.85, up from a recent low of just $14.06.

Although the miner's shares came under intense pressure at the beginning of the year due to plummeting commodity prices, investors have begun to pile back into the shares more recently. To begin with, iron ore prices have remained steady around US$46 a tonne, according to The Metal Bulletin, while oil prices have rebounded strongly.

Indeed, the resource's price surged almost 8% on Wednesday following an unexpected drop in crude inventories, which have been piling up as a result of growing production combined with waning demand. Meanwhile, there has also been talks between major oil producers to freeze output to support the resource's price.

Brent crude oil rose 8.4% to US$34.88 a barrel, according to CNBC, while US crude prices also rose strongly, prompting some analysts to suggest that prices won't fall below US$30 again.

Comments such as these saw huge support for shares in the energy sector, with Santos Ltd (ASX: STO), Sundance Energy Australia Ltd (ASX: SEA) and Woodside Petroleum Limited (ASX: WPL) all lifting 4.1%, 10.8% and 2.7%, as well.

While a deal is possible, investors should still approach the sector with caution. To begin with, a deal is by no means certain and, even if one is reached, it doesn't necessarily mean it will ease the pressure on the world's current stockpiles. One analyst interviewed by CNBC even went so far as to say "this (is) a selling opportunity."

At the same time, other economists are suggesting the recent gains for the iron ore price may prove unsustainable, which could see the commodity's price fall back below US$40 a tonne. As reported by The Australian Financial Review, Liberum Capital even thinks this could be an opportunity to short (that is, bet on the share price falling) both BHP Billiton and Rio Tinto Limited (ASX: RIO).

Indeed, the gains recorded by BHP Billiton recently have certainly been encouraging for shareholders, but they shouldn't necessarily act as a signal for potential investors to buy. There are still strong headwinds facing the entire sector and BHP isn't in the clear just yet.

Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »