Shell share price set to slide after Brent crude slips below $45

The oil and gas major saw its shares slide on Friday and could fall further next week after oil prices slipped below $45 a barrel amid demand and oversupply concerns.

Royal Dutch Shell's shares slid 2% on Friday and may slide further after oil fell below $45 a barrel amid concerns about weak demand and oversupply.

The news applied added pressure on Shell’s share price, with the stock struggling to rebound after the company reported a financial loss because it was forced to write-down billions of its stranded oil and gas assets due to a collapse in prices earlier in the year as a result of Covid-19.

The Anglo-Dutch oil and gas major revealed a net loss of $18.3 billion in its second quarter (Q2) earnings at the end of July, representing a sharp decline from the $3 billion profit it made over the same period a year prior.

Luckily for Shell, its losses were mitigated by its oil trading unit, which managed to insulate the company from the full economic impact of the coronavirus pandemic which drove the price of crude to 21-year lows.

‘Shell has delivered resilient cash flow in a remarkably challenging environment,’ Shell CEO Ben van Beurden said. ‘We continue to focus on safe and reliable operations and our decisive cash preservation measures will underpin the strengthening of our balance sheet.’

‘Our high-quality integrated portfolio, disciplined execution and forward-looking strategy enable sustained competitive free cash flow generation,’ he added.

Shell is trading at £11.72 per share at the time of publication, with the stock down 48% year-to-date.

Brent crude oil price slips below $45 a barrel

The price of oil slipped below $45 a barrel on Friday, with the commodity shedding most its gains this week in the process, with the market weighed down by investors concerned about whether demand will rebound amid oversupply and the coronavirus pandemic.

Adding to investors concerns, the International Energy Agency (IEA) and the Organisation of Petroleum Exporting Countries (OPEC) slashed their forecasts for oil demand in 2020 earlier this week.

Brent crude is trading at $44.88 a barrel after falling by just eight cents at the time of publication, while the US West Texas Intermediate is down three cents to $42.21 a barrel.

Traders will likely be disappointed that oil has struggled to really move out of its narrow band for some time now, but other stakeholders within the industry are grateful that a degree of stability has returned after weeks of extreme volatility.

Brent crude weakens within consolidation phase

Brent crude has been consolidating over the course of the week, with the recent failure to break into a fresh high subsequently creating a descending trendline, according to Josh Mahony, senior market analyst at IG.

‘We are now back at a potential third touch of an ascending trendline which would create a symmetrical triangle. As such, we would need to see a break through the $44.60 (bearish), or $45.96 (bullish) level to bring about a breakout signal,’ he said.

‘However, should we see a downside breakout, this would likely represent a retracement of the wider rally from $41.72, thus bringing Fibonacci support into play,’ Mahony added.

How to trade stocks with IG

Looking to trade Shell and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘Royal Dutch Shell’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.