BP shares moved higher for a second straight day Friday as investors apparently dismissed new estimates that the oil spill in the Gulf of Mexico could be far worse than previously thought and the company may defer its second-quarter dividend.

BP shares rose 89 cents, or 2.8 percent, to $33.68 in afternoon trading in New York. The shares were as high as $34.46 during the session.

The stock jumped 12.3 percent on Thursday after a 15.8 percent slide to $29 on Wednesday, its worst drop since the spill began back in April. Prices hadn't been that low since 1996.

Analysts have said that the stock has been oversold on fears that the costs of the spill will wipe out the company.

"A rational analysis suggests that, despite the uncertainty, the market's reaction has gone way overboard," said analyst Mark Gilman of the Benchmark Company.

Even with the two-day rally, BP shares have lost $82 billion in value since the explosion on April 20.

There also were reports that BP may defer its second-quarter dividend and put the money into escrow until the company's liabilities from the spill are known.

The London Times, quoting people familiar with the matter, said future quarterly dividends would be treated the same way.

Analyst Alex Morris of Raymond James said if BP cuts or suspends its dividend it could take some heat from Washington off the company.

"It's kind of counterintuitive, but the market hasn't exactly been reacting rationally to this whole saga," he said in an e-mail.

"We never thought (and still don't) that BP as a going-concern is threatened, but this week the market showed it's scared to death of a potential bankruptcy."

Analyst Michelle della Vigna of Goldman Sachs said BP shares can go up from here even under his worst-case scenario that has BP paying $70 billion in damages.

"This suggests that risk/reward is currently tilted to the upside, given there is still value in the shares, even at very conservative damage assumptions," the analyst said in a research note.