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Here’s how Shel, BP, CVX and XOM moved with respect to Brent last week (approximate scale shows Shel and Brent price )
https://invst.ly/136gt0
To put that into some context, here’s a plot of Shel & Brent over the last 15 months , with some dates highlighted when OP was at the current price of $83:
https://invst.ly/136h59
Brent has risen by over $1 since Friday’s LSE close, which suggests that the sp could strengthen further on Monday if OP remains firm.
More recently, Shel has been lagging OP and the comparison over recent weeks suggests that Shel is at least £1 down currently and should be heading to fill the gap created by the update on Jan 8th to 2566 once confidence is restored sufficiently.
https://invst.ly/136hzp
Probably a bit more sense and direction when the impairments, and exactly where they have fallen, are exactified on the 1st February.
Sawan as a "new broom" CEO may well put the impairments at the top of the forecast range - $4.5 billion is a serious dampener for any party. Really could be quite positive in PR terms with an election only maybe 10-nonths away though.
Brent has been on the up since December
Brent: https://invst.ly/133lvt
but Shel has been going the other way, pushed flat down on the the bottom blue tren here:
Shel: https://invst.ly/135h12
BP similarly, although with slightly more sign of an uptick this last couple of days:
BP: https://invst.ly/135h0l
I would suggest 15% Divi hike as per previous years, and we are still below pre covid levels even then.
Share fundamentals will give you the shares in issue
Hike possible?? standard 4%? or 10% or maybe 15%???
Also how can i check the total shares
Absolutely GfG - the ‘increase in spare capacity’ observation was in the article you posted and I hadn’t switched onto that until your post - so thanks!
Good to see you back Armani: hope this works out well for you - and us, of course (self interest is never far away in these matters).
I’m not too disappointed in today’s minor drop although it did run counter to OP and also went against the expectations I had expressed in a previous post. No chart today as my interest is currently in the ratio of sp to OP which is at a recent low of about 29.6x. In terms of the 30 day moving average, it places Shel about £2 down relative to OP when compared to how it has performed on average over the last month (by my amateur calculations). To me, this represents an eventual upside when conditions improve - hopefully by FY results or Q2 when US ‘driving season’ approaches.
Time will tell as char333 would say - it seems he’s over on the BP chat now.
Boyo - looking at KSA crude oil production for 2023, it came down from very roughly 10-10.5 million BPD in the first half of the year to an average of 9 million and a little below this consistently for the half beginning July 2023.
As you point out this effectively gives the KSA spare production capacity, which looks to be around a minimum of 10% consistently over the last 6-months +. Essentially its a safety buffer to mitigate any price shocks & introduces a swing-production element to their overall output, which they can change significantly depending on market conditions. Its all about "control" mechanisms.
Good morning All,
I've waited on the sideline to buy back into SHEL for a very long time.
First position 2371p + usual fees.
Will add on any further retracement
ATB
A good article, GfG. I liked this observation in it:
‘[OPEC] are effectively increasing their spare capacity by reducing actual production. And they will not change course until prices rise, which they would only do if a supply disruption occurs.’
OP has always been a guessing game.
The current reduced output from North Dakota (part of the Bakken field which crosses North Dakota, eastern Montana, and southern Saskatchewan) is temporary due to weather conditions and it’ll be back in full swing as the next months of futures contracts come into focus.
But one thing is for sure: OPEC and US Shale tussle for volume and price, which either drives it to a sweet spot that suits both or it goes off the rails.
This shows Shel v Brent over the last few months.
https://invst.ly/1331ep
I'm currently thinking that Shel 's sp will absorb a further modest fall in OP and hold above the blue unless something unexpected happens (which, of course, it probably will !! ).
boyo - i can't really fault any of your assumptions in your last post. i must admit that i have been a bit mystified about the oil market over the last few weeks. this oilprice.com article seems to sum up a lot of my general views:
"why oil markets aren’t reacting to supply disruptions and geopolitical risk"
https://oilprice.com/energy/energy-general/why-oil-markets-arent-reacting-to-supply-disruptions-and-geopolitical-risk.html
the edge seems to have come off the "normal" market reaction to major events. several posters have mentioned the malaise and almost indifference that greets evidence of spreading with the middle-east conflict. everyone seems for instance to universally fear the consequences of escalation with iran. but, iran is flinging missiles at iraq, syria & now ****stan, backing hezbollah in lebanon, has sworn the eradication of the israeli state, etc whilst using the houthi's in yemen to disrupt world trade & particularly the oil trade.
it looks like 90% of container traffic has been diverted from the suez route, bulk carriers have been severely impacted along with tanker traffic. the lack of reaction seems to focus on container ships being much bigger so less reliant on the suez route and suez traffic having generally reduced over time, but i find this difficult to agree with. maybe the world reactions will change if a tanker is sunk off the coast of yemen, but the us and uk have already been drawn into a wider conflict with multiple yemeni bombing raids!
maybe there are concerns that unless the markets are anaesthetised they could panic escalation of the conflict to the level of western power boots on the ground. inflation has not fully been laid to rest, and shipping disruption will increase cpi, and we are talking about tax cuts - nothing to do with an upcoming election of course! crude oil production in north dakota falls by 650,000 to 700,000 bpd recently & although this heading for 1% of daily world usage - virtually no market reaction.
in the background the ksa is happy to confront us shale production with lower prices, and funding putin's war in ukraine will have its funding significantly destabilised. keeping the op low in an election year has multiple benefits including: inflation, interest rates and growth though.
at the moment raising the op appears to be as difficult as raising lazarus from the dead. cold weather! what cold weather!
Https://oilprice.com/Latest-Energy-News/World-News/Shell-Starts-Layoffs-in-Search-of-Efficiencies.html
Shell has begun hundreds of layoffs, sources with knowledge of the matter told Bloomberg on Thursday, as the supermajor looks to create more value through simplification and discipline.
Last year, Shell laid out plans to raise its dividend by 15%, effective from the second quarter 2023 interim dividend, as the UK-based supermajor pledged to grow its gas business and extend its position in the upstream.
Boyobach - I hope you are right - its been a poor few months for oil especially given the OP...Not even ructions in the ME are upping it
Yes indeed, dananzi. I added. Let's hope the blue line holds:
https://invst.ly/130-6f
The world will find itself short of oil from 2025 onwards as exploration for longer-producing crude reserves is set to lag demand growth, Vicki Hollub, chief executive of Occidental Petroleum, said at the Davos forum on Tuesday.
https://oilprice.com/Energy/Crude-Oil/Occidentals-CEO-Sees-Oil-Supply-Crunch-from-2025.html
Buy back what I sold...my guess is we see lower from here but happy at this price.
Regarding 'Speculation on $110 a barrel but no conviction on this from the majority of analysts' , GfG, It's interesting that higher OP - and even the maintenance of its present level - currently seems dependant on global conflicts of one form or another. Absent these circumstances, if the supply and demand equation was operating naturally in a stable global trading environment, it does appear that US Shale production would again be driving OP down and that KSA, as head of the unruly OPEC cartel, would yet again be engaging in a battle to maintain market share. Over the last decade this has inevitably driven OP down to unsustainably low levels causing the boom & bust cycles in the US. The difference this time, however, might be the fact that the debt-laden shale producers, that had to pump ever more to survive as OP fell, have largely been eliminated - so OP might simply fall to a lower compromise between OPEC and US Shale, which I guess might be around $60.
With attic conditions at minute it is causing a big drop in WTI. But why is the price not up with heightened tension in Suez Canal?
Looking ahead Interesting to look at crude oil futures going out to December 2033.
All red. From about 2026 to 2033 prices in $50s and low $60s. Makes it hard to want to hedge production out in future, which we all do. I suspect this is why stock is down more than current price of $72.08. Today’s stock price is a reflection of future earnings. JMHO of course.
If we can get out of there with no legacy commitments and $2.4bn in the pot I'll be delighted.
https://uk.finance.yahoo.com/news/shell-sell-big-piece-nigeria-172936105.html
Hooters (Houthis) "surprise" announcement that they will be targetting American ships, not just ships heading for Israel:
https://oilprice.com/Latest-Energy-News/World-News/Houthis-Will-Target-US-Ships-in-the-Red-Sea.html
Suez Canal traffic:
https://oilprice.com/Energy/Energy-General/Suez-Canal-Crisis-A-New-Catalyst-for-Global-Inflation.html
If the activist groups want to help invest in 'green' why don't they go invest in Orstead or Siemens where billion dollar losses are available for investors.
"Shell's board has previously advised shareholders that the Follow This resolution was unrealistic and simplistic, that it would have no impact on mitigating climate change, have negative consequences for our customers, and was against the interests of the company and our shareholders.
"Continued, targeted investment in oil and gas will remain necessary to meet global energy demand over the coming decades as the world transitions to a lower carbon future."
Oilprice.com - Speculation on $110 a barrel But no conviction on this from the majority of analysts:
https://oilprice.com/Energy/Crude-Oil/Traders-Speculate-on-110-Oil-As-Middle-East-Tensions-Escalate.html
Since late September the red trend here has kept a lid on OP:
https://invst.ly/12-stx
In December OP punctured the blue trend that has marked the bottom for Brent for nearly three years, with green marking the recovery path. However, the pressure remains whilst red remains unbroken. Which trend will prevail? We’ll know by February.
Yes indeed GaFG: the net effect has been for OP to return to within $0.5 of last Friday’s LSEx close, at $78.5. The Oil Co sp’s, however, take a more cautious track and usually smooth out the volatility tending to drop quickly and recover more slowly. So this week’s summary chart looks like this: https://invst.ly/12-805
I did add during yesterday’s lows and am now ‘overweight’ in Shel but at a very healthy net cost per share given my trades. I will add more if the opportunity looks right. https://invst.ly/12-88z
What a difference a day makes - Brent at $80.67 a barrel - in tandem with cruise missile futures going up!
What really amazes me is that the OP was barely impacted by the escalating, increasingly provocative, Red Sea & Straits of Hormuz shipping threat, but a point was going to come when the US had to react. It is more than very debateable whether the Saudis, even with 300 combat aircraft could carry out a sophisticated & wide ranging attack like this, or they would have shown their capability in Yemen by now.
And now a strike on yemen which could have the side effecr of further disruption