Shell Share Price Seems Vulnerable, Chart Pattern Shows

The Royal Dutch Shell share price in the spotlight on Thursday after the company announced more efforts to slash its carbon emissions. The RDSB and RDSA share prices declined by more than 0.50% in early trading in London.

What happened: The Shell share price has lagged the market this year. It has jumped by just 6% while other supermajors like ExxonMobil and Chevron have risen by more than 30% and 50%, respectively. The energy sector is one of the best performers this year.

Shell has lagged at an important time for oil companies. For one, demand is rising, which has pushed prices higher. Also, the companies are now relatively leaner after cutting costs substantially in the previous year. Most importantly, the companies have boosted their dividends and share buybacks. 

The possible reason for the underperformance is the ongoing trend of ESG. Two weeks ago, Shell suffered a major setback after a court ruled that it needs to come up with a feasible solution to slash emissions. And in statement yesterday, the CEO said that the company will do more to slash carbon. He said that he was:

“disappointed that Shell is being singled out by a ruling that I believe does not help reduce global CO2 emissions. A court ordering one energy company to reduce its emissions – and the emissions of its customers – is not the answer.”

The transition to clean energy will likely be a rocky one as the Wall Street Journal wrote recently in its feature on Orsted. The paper said:

“It took government intervention, years of subsidies and a wide-open competitive landscape for Ørsted to succeed.”

So, what next for the Shell share price?

RDSB share price forecast

The daily chart is not looking good for bulls. The chart shows that the Royal Dutch Shell share price has been in a consolidation mode recently. The stock has also formed a head and shoulders pattern, which is usually a bearish signal. It has also moved slightly below the 50-day and 100-day moving averages (MA). Therefore, the stock will likely break out lower in the near term. If this happens, the next key level to watch will be the support at 1,280p followed by 1,200p. However, a move above 1,350p will invalidate this view.

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Shell share price chart

Shell share price

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