Royal Dutch Shell Share Price Rises as Green Energy Shift Stumbles
Royal Dutch Shell share price is gaining today even as the company’s goal to become a major clean energy supplier hit a major wall. Its class A shares are up by 0.90% to 1,406p while class B have risen by more than 1% to 1,362p.
Transition to clean energy problems
Like all oil and gas companies, Royal Dutch Shell has been struggling in the past few years. Indeed, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has dropped by more than 50% in the past five years and 35% year-to-date.
There are three primary reasons for this. First, the price of crude oil has been unstable after it reached a high of $145 a few years ago. Second, investors have embraced environment, social, and governance (ESG) principles, which has seen most of them abandon oil companies. Third, many financiers and investors have announced plans to dissociate themselves with these firms.
To shift from a reliance on oil, Shell has made elaborate plans to invest in clean energy. In fact, the company will deliver a major update in February where management will explain their approach. Furthermore, BP, its biggest competitor has initiated plans to slash oil production by 40% in the next nine years.
In a report yesterday, the Financial Times revealed that senior executives at the company have left while others are preparing to resign. One of those who have left is the head of solar, storage, and onshore wind. Others are the head of the firm’s distributed energy division while the head of offshore wind is planning to leave.
Is Shell a good investment?
Shell share price is possibly rising because of the recent vaccination news. Yesterday, the UK, where the firm has vast business, started vaccinations. While the process is expected to go on for months, it is a positive sign for demand. Similarly, in the United States, the Food and Drug Administration (FDA) is expected to approve the Pfizer vaccine, which is another positive sign.
The vaccine, coupled with the recent decision by OPEC to gradually increase production has been a good thing for oil prices and Shell.
Shell share price technical outlook
As I have written before, I believe that Shell shares are in an overall bullish trend. Indeed, the stock has already risen by more than 60% since November, making it one of the best FTSE 100 performers. During this climb, Royal Dutch Shell share price has moved above the 200-day and 50-day moving averages.
And while a golden cross has not yet happened, it is relatively close. This is when these two MAs crosses. Therefore, in the near term, I suspect that the stock will continue rising as bulls aim for the important resistance at 1,500p.
However, this price action will be invalidated if the price manages to move below 1,200p, which is both an important psychological level and the 200-day MA.