Shell share price continued its bullish trend this week as investors reacted to the elevated natural gas prices and the latest decision by OPEC. The stock jumped to a high of 2,365p, which was higher than the year-to-date low of 1,910p. Other oil stocks like Tullow Oil, Capricorn Energy, BP, and Chevron also did relatively well.
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Natural gas and oil prices
Shell is one of the biggest natural gas producers and sellers in the world. The firm makes more money selling gas than most other supermajors like Exxon and Chevron. In 2020. Shell produced 2.79 trillion standard cubic feet of natural gas. Therefore, the firm is expected to benefit from the soaring demand for natural gas following the decision by Russia to suspend shipments to Europe and other countries. As a result, natural gas prices have soared to record highs.
Shell is also expected to benefit from the decision by the OPEC+ cartel. In a statement on Monday, members of the group announced that they will reduce oil production slightly in a bid to keep prices at an elevated level. As a result, the price of Brent, the global oil benchmark, rose to $95 while Western Texas Intermediate rose to over $88. Shell will continue generating huge revenues as long as oil prices remain above $80.
Therefore, Shell share price has done well as investors anticipate more returns by the company. For example, the company is expected to raise its dividends and increase its buybacks this year. In July, Shell announced that it had started a $6 billion share buyback program as its profits hit a record.
Shell share price forecast
The four-hour chart shows that the Shell share price has been in a bullish trend in the past few months. During this time, it has moved above the 25-day and 50-day moving averages. It also managed to move above the important resistance level at 2,240p, which was the highest point on June 29. Most importantly, it retested this level in August. A break and retest pattern is usually a bullish sign.
Therefore, the Shell stock price will likely continue rising as bulls target the next key resistance level at 2,500p. A drop below the support at 2,300p will invalidate the bullish view.