Shell share price was down for the third consecutive day on Thursday as investors chewed on the company’s second-quarter earnings. The SHEL stock ended its trading session 1.36% lower at 2364p. The company’s total market capitalization currently stands at £160 billion.
Lackluster Earnings
Shell share price, alongside those of other oil and gas giants, has been in the red for the past few days amid disappointing Q2 earnings. Shell, Europe’s largest energy company, announced a 56% crash in its second-quarter profits to $5 billion, missing analysts’ expectations of $6 billion and down from bumper profits logged in 2022 when oil and gas prices jumped in the wake of Russia’s invasion of Ukraine.
According to the company, energy prices have dropped sharply this year as fears of shortages slowed amid global economic headwinds. Additionally, earnings in liquefied natural gas, a crucial business for the energy giant, dropped sharply because a less turbulent environment led to fewer opportunities to profit from trading.
With oil and gas prices and refining profits margins dropping in the second quarter, Shell slowed its share buyback programme. In its report, the company said it would repurchase $3 billion in shares over the next 3 months, down from $3.6 billion in the previous quarter. The company increased its dividend by 15% to $0.33 per share as announced in June.
Total Energies also reported weaker-than-expected earnings for the second quarter, recording an adjusted net income of $5 billion, a 49% drop from bumper profits posted a year earlier. Oil and gas giants, Norwegian Oil and Equinor reported a 57% decline YoY each as oil and gas prices slipped.
With the latest drop in earnings in the energy sector, the impact of lower commodity prices is likely to be mirrored throughout the sector. Britain’s BP and US rivals Exxon Mobil and Chevron are scheduled to publish earnings in the upcoming days.
Shell Share Price Forecast
The daily chart shows that the Shell share price has been struggling to break above the important resistance level at 2455p. Along the way, the SHEL stock has formed a bear channel shown in yellow. The stock remains slightly above the 25-day and 50-day exponential moving averages, with its RSI moving slightly lower.
As such, the Shell stock price is likely to fall in the immediate term as global economic headwinds outweigh price increases. A move below the immediate support level at 2341.5p could pave the way for a further decline to the next support at 2296.5p. On the other hand, we cannot rule out a move above the important resistance zone of 2455p.
