Royal Dutch Shell share price rosein early trading as investors reacted to one of the company’s worst quarters. The shares are trading at 1232p, which is
Royal Dutch Shell Earnings
In a statement, Royal Dutch Shell, one of the biggest oil supermajors said that it made a net loss of $18.3 billion. That was the biggest loss the company has made in years and was mostly because of a significant write off the firm did in June. This loss compared to a $3.5 billion profit it generated in the same period in 2019. It was also lower than the $2.9 billion profit it made in the first quarter.
The big loss is mostly understandable considering that crude oil prices were in a sharp decline in the first part of the quarter. Indeed, at some point, the prices fell to below zero. The company expects that the price of Brent will average about $35 a barrel this year, down from the previous guidance of $60.
In its outlook for the third quarter, the company expects to produce between 820 and 880 thousand boe/d of integrated gas and new energies. It also expects liquefaction of between 7.6 and 8.2 million tonnes. In its upstream division, it expects to produce between 2,100 and 2,400 thousand boe/d. The company is also conducting cost-cutting measures worth billions. It is targeting to reduce opex by between $3 and $4 billion.
On a positive side, its trading business helped to caution the company. At the same time, Total, announced that it was writing down $8 billion worth of assets.
So, is Royal Dutch Shell Shares a Buy Today?
The performance of Royal Dutch Shell price will mostly depend on the macroeconomic situations and the trends in oil prices. In recent weeks, the price of Brent has remained near to $45, which is $10 barrels above Shell’s target. However, with the number of coronavirus cases in the US and other countries rising, there is a possibility that the price will be under pressure.
As I wrote yesterday, Royal Dutch Shellshare price seems cheap. Furthermore, it is close to its lowest level in history. However, with the recent volatility in oil sector, investing in Royal Dutch Shell and other energy companies seems to be a big gamble.
Royal Dutch Shell share price analysis
The daily chart below shows that the Royal Dutch Shell share price has been under pressure. It is trading below the 50-day and 100-day exponential moving averages while the RSI has been dropping. The price is also below the 23.6% Fibonacci retracement level on the daily chart.
Therefore, even with today’s bounce, I expect that the shares will remain under pressure as bears target the next support at 1171p, which is the lowest level on May 14.
On the flip side, a move above 1415p will invalidate this trend. This price is along the 100-day EMA and is also the highest level on June 23.