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Some understandable profit taking this morning but is RDS poised to break out from its two and a half month limiting trend (red)?
https://invst.ly/w-7k5
BP is lagging in that respect, which may indicate that the time hasn’t come:
https://invst.ly/w-7li
Much probably depends on Brent (note the similar breakout potential between the three): https://invst.ly/w-7ow .
Interesting to see RDS’ reaction to Brent movements today. Here’s a 15’ view that shows today’s moves and the reaction to Brent’s rise whilst the market was closed for Xmas: https://invst.ly/w-b-w . It nicely demonstrates that RDS has effectively softened by 70p in relation to Brent since last week. As I hinted earlier by reference to BP, the market didn’t seem likely to pursue a breakout - quite the reverse as it turned out when all three dropped back sharply around 4pm. Will the market have second thoughts tomorrow? Not judging by the way today ended....
It’s interesting to note the differing response to OP movements by Chevron compared to RDS over recent days. https://invst.ly/w-iw3
RDS has been the more volatile of the two majors over recent months and, having surged ahead after news of the Permian deal, is now limited by a falling trend (red) which pushed it down yesterday (circled), For Chevron there was no such barrier and it has continued its steady rise, regaining the lead. The logical conclusion is that IF OP continues to remain firm then RDS will eventually breakout from under the red, chasing the Chevron line shown here. This would put RDS back at about 1700 at the current Brent price level.
Nice breakout this morning - shame about the 30p gap!!
https://invst.ly/x0o1x
If this surge continues then the next obvious resistance is around 1715 but 1750 comes into view as a credible target region (red circle) https://invst.ly/x0q9k
Yihaaa!!! New Year! New Shell plc! Now a great British company!
trimmed a couple around 1708 to top
up elsewhere, but remaining long.
.... and have you noticed how BP is flying? even more impressive so far today.
Perhaps today’s jump in SP should not be a complete surprise given the movements in Brent that have occurred over the last week whilst the LSE has largely been asleep. Here’s a 15’ view of Brent, Shell, BP and Chevron rebased to Boxing Day - when Brent trading resumed at around 11.30 pm:
https://invst.ly/x0t9t
It would be fair to say that, despite today’s boost, Shell and the other majors are all slightly weaker against Brent than they were immediately before Christmas. In Shells’s case to the tune of about 30p (The 30 day MA of the Shell:Brent ratio is about 21.6)
So there could be a bit more ‘in the tank’ for tomorrow’s ride…although profit taking seems likely to hold the price back for now and the 1715 resistance may not be breached just yet
With today's further rise, Shell is now 'spot-on' the relationship it had with Brent at the close on Christmas Eve: https://invst.ly/x1377
For now the sp appears to be tracking Brent - the EIA weekly report comes out later today...
... meanwhile, Brent is also in a breakout pattern. Is it sustainable? https://invst.ly/x13bv
Tis like somebody lit a rocket under the SP recently! Most satisfactory....
Think we got to 1815 in September?...Brent hit 87 dollars at that time. Then came Q3 results and we fell back pretty quickly to the low 1600's!!
Question is, can we expect a repeat after Q4?
pastyc: Shell peaked at 1813, with Brent at nearly $86 on October 20th. https://invst.ly/x1930
It's marginally stronger against Brent today. The Q3 results seemed to fall short of investor expectations - which I felt had ramped up too steeply beforehand. With results it's often a flip of a coin. However OP also fell back after Q3 - so the two factors were in play.
I decided to take profits on one of my trading tranches (acquired at 1578) today as I felt the prospects for further gains in both Brent and RDS were cooling off after the EIA figures. However OP remains firm and has itself broken out as I've previously pointed out, so it could continue to head higher. As the Q4 results are still a month away, I think OP will continue to be a main influence on the sp in the meantime - unless there's some company specific news (concerning distributions, for example).
Several posters (myself included) commented that Q3 results were deliberately expressed so as to camouflage good profits in some smoke and mirrors. Given current press appetite for fossil fuel windfall taxes I'm hoping Shell do something similar again for Q4 results. Big profits, big dividends and special dividends for Permian sale all fraught with the danger of making Shell look like a cash cow to solve the Govt's problem of how to pay for April's energy cap.
Low key profits, investment and paying down debt all much more politically / socially acceptable at present. We'll get the value one day, just not yet.
Great post Jim,
100% agree.
The lower the overall profit the better longer term for share holders….
Just spend spend spend so results look average……..
Jim, Never, I think a lot of holders / posters would agree with you & it is always open to government to stop allowing companies to pay negative tax on their fossil fuel extraction and production operations in the North Sea. This would help appease any adverse public reaction.
Since the Paris agreement BP alone has received £490m & in the tax year 2019-20 BP received £39m, ExxonMobil received £117m in total from HMRC, Shell got £110m.
Jim800: I do agree that PR has to be handled right (just look at Djokovic for a lesson in how not to do it) but I'm not sure that Shell can hide away success, or failure, completely. You might miss an elephant in the jungle... but in a brightly lit room ...
I think the SP reaction to Q3 was mostly about the market getting ahead of itself plus OP hitting a significant peak and pulling back.
When it comes to Shell and Brent (or BP and Brent for that matter), it’s not always obvious which one is leading (anticipating) or lagging (reacting). Here’s Brent against RDS in 15’ steps since the market opened on Tuesday - bear in mind that Brent trades for many additional hours overnight, so the 8.00am moves can look a bit sharp or go in opposite directions: https://invst.ly/x1n-a
In reality, Shell does not influence Brent directly as much as the reverse, whilst Brent itself is under global market influences which are common to both. As I’ve observed in the past, it’s when they diverge over a significant period that something interesting is happening. Even as I’m typing this, Brent‘s breakout from Tuesday is continuing - if it breaks $86 then I think sparks will fly: https://invst.ly/x1o4z . Will Shell keep pace with it if it does?
Thinking of buying some Shell shares .
Does anyone have an idea what the share price will be on Annual Results day at the beginning of Feb?
Is a P/e ratio of 13.35 for Shell sensible?
Oliver,
I predict the sp will either go up, stay the same or fall.
I guarantee you I am right.
In other words, who on earth knows? If anyone knew that, they'd be worth a fortune in a month's time.
Sorry for being flippant, but it's a daft question.
Fwiw, if it falls back a bit, I might have a serious short term punt here.
Well the breakout that started at the end of December continues at pace, to use Shell's new word of the month. It seems to be fueled more by OP rather than anything Shell specific and the ratio for sp (p): Brent ($/bbl) at the close was 21.3 , which is very consistent with recent days. The tracking is very tight as can be seen in this 15’ view from 9.15 on Jan 4th: https://invst.ly/x3kee .
As anon1 points out - predictions about sp are next to useless. The trick is to spot changes of direction which, as most investors know, is still very challenging. The task is even harder with a volatile commodity like Brent dominating the movements, as it is currently. Suffice it to say that Brent has only wobbled a couple of times since Dec 21st on its climb upwards:
https://invst.ly/x3khc
We all know that $86 is a rather critical level for Brent - it hasn’t gone onwards through it to $88 since 2010, when it continued to $100+ and stayed above it for over three years. It looks like it might be about to have another go at $86, although this time it has the additional challenge of the orange ‘ceiling’ here:
https://invst.ly/x3kmw
Interesting times! GLA.
OliverTheHardy asked: ‘Does anyone have an idea what the share price will be on Annual Results day at the beginning of Feb?’
Well....
1 ‘Is the market getting ahead of itself again?’
I think it probably is (no doubt encouraged by Shell’s ‘at pace’ comments). It’s a bullish environment for Oil at the moment - so I’m not currently betting on Brent or Shell falling back significantly whilst the signs are positive. The sp could easily remain strong as the results approach, IMO, but what happens immediately before or after they are published is another matter.
2. ‘Do we know what the price of Brent will be tomorrow, let alone in three weeks time?’ OP seems to be in control of the sp at present, and January is often a weak part of the seasonal cycle. But who knows?
3 Where did you get that P/E ratio? Most places give it as around 40 (which I’m not saying is correct).
It was mentioned the other day that we needed to fill the gap at £16.20. Is it all nonsense this gap filling and charting?