Shell Share Price Outlook as Oil Prices Tread Water


Shell share price has been on a bear run for the past few weeks as economic concerns grow. The stock has dropped by more than 1% in the past week and more than 2% in the past month

Economic Concerns

Shell share price has been under intense pressure for the past few weeks amid recession fears. The Bank of England raised its key interest rate by a further half-percentage point on Thursday. The BoE’s Monetary Policy Committee voted 6-3 to raise Bank Rate to 3.5%, its highest since 2008.

After the BoE’s announcement, the European Central Bank said it was also raising rates by half a percentage point and further increases were imminent. The Federal Reserve is also set to continue with its interest rate hike next year amid a looming recession in the US economy.

Oil prices have been under intense pressure for the past months as traders worry about fuel demand outlook. This has been brought about by a stronger dollar and further interest rate hikes from central banks globally. An analyst at CMC Markets said;

“The oil price is under pressure today as the Fed’s hawkish guidance for its monetary policy sparked renewed concerns about economic growth, lifting the U.S. dollar and sending commodity prices down,”

Oil prices were down on Friday with US West Texas Intermediate (WTI) crude falling 2.52%to trade at $74.20 per barrel. Brent crude slipped 2.28% to trade at $79.35 per barrel. With the likely recession and further hikes in interest rates, oil prices are likely to continue falling which will see the Shell share price decline.

Shell Share Price Analysis

The daily chart shows that the Shell share price has been on a strong bearish run for the past few weeks. The stock has managed to move below the 25-day and 50-day moving averages. Its Relative Strength Index (RSI) is below neutral at 46. It hit an intraday high at 2300.5p before pulling back.

Therefore, the Shell stock price is likely to continue falling as global economies face recession fears. If this happens, the next level to watch will be the important support at 2238.5p. However, a move past the resistance at 2457.5p will invalidate this view.

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