Shell share price was trading higher on Monday, building on its previous gains as oil prices edged higher on the back of production output cuts by OPEC+. At the time of writing, the stock was trading 1.20% higher at 2322p.
Shell share price has been in freefall this year, falling more than 1% in the past week and nearly 3% in the year to date. Market volatility in the oil and gas sector has seen most stocks slip since the start of the year. Even so, all hope is not lost as oil prices seem to be rallying.
Oil prices were rocketing over the weekend after oil kingpin Saudi Arabia announced on Sunday that it would further cut oil production by a million barrels per day. The Organization of the Petroleum Exporting Countries and Allies (OPEC+) made no changes to its oil production plan for this year at its Sunday meeting.
According to Saudi’s energy ministry, the voluntary output cuts will begin implementation in July. The kingdom’s output would reduce to 9 million barrels per day, down from 10 million barrels in May. Output cuts tend to increase the demand for oil and gas, thus making oil a hot commodity, and pumping oil prices higher.
OPEC+ makes up almost 40% of the world’s crude oil, and its policy decisions tend to have a significant impact on oil prices. At press time, Brent crude oil was trading higher by 1.66% at $77.44 per barrel, while the US West Texas Intermediate (WTI) crude oil jumped 1.56% to trade at $72.85 per barrel.
Even with the OPEC+ cuts offsetting falling demand, Shell share price remains prone to other significant dangers. Investors are worried about the potential of a whooping new windfall tax in Britain, which would weigh on energy stocks.
Shell Share Price Outlook
Shell share price has been hovering around the crucial support level of 2310.5p for the past three days. The Shell stock price remains below the 50-day, 100-day, and 200-day moving averages, as highlighted on the daily chart. Its Relative Strength Index (RSI) has remained slightly below the signal line.
Despite the jump in oil prices, the bears seem to remain in control of the market. As such, a move past the important level at 2341.5p will initiate a bull and bear race, with the bulls eyeing the next resistance level at the 50-day MA at 2370p. On the flip side, if the stock remains below the 2310.5p zone, the next support level will be at 2265p.