Shell Stock: Key Market Performance Metrics in 2Q17

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Shell Stock: Key Market Performance Metrics in 2Q17 PART 1 OF 11

How Is Shell Stock Performing in 2Q17 So Far?

Integrated stocks’ performance

Royal Dutch Shell (RDS.A) stock has risen 3.4% since April 3, 2017. Comparatively, its peers ExxonMobil (XOM), Chevron (CVX), and BP (BP) rose 1.2%, 0.7%, and 4.4%, respectively, in the same period.

Among the broader market indicators, the SPDR Dow Jones Industrial Average ETF (DIA) and the SPDR S&P 500 ETF (SPY) have risen 3.7% and 3.4%, respectively, since April 3.

How Is Shell Stock Performing in 2Q17 So Far?

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WTI falls in 2Q17

Integrated energy stocks typically show high positive correlation to crude oil prices. So, the fall in WTI (West Texas Intermediate) prices could pressure these stocks. In 2017 year-to-date (or YTD), WTI prices have fallen 14%.

In 2Q17, particularly in May, oil prices rose in anticipation of the main oil producers’ May 25 meeting. This trend was due to the possibility of greater oil cuts by OPEC members for an extended period.

Plus, crude oil and gasoline inventories dropped for the week ended May 19, 2017, according to API (American Petroleum Institute) data. In 2Q17, from April 3 to May 23, oil prices rose 2%.

However, this uptrend has reversed. Although OPEC and non-OPEC members agreed to the production cut, they fell short of expectations of some market participants. Since the meeting, oil prices have fallen 11%. Overall, crude oil prices have fallen 9% in 2Q17.

Shell stock rises

Despite the fall in oil prices in 2Q17, Shell (RDS.A) stock rose and posted strong 1Q17 numbers, surpassing estimates. Shell’s 1Q17 adjusted EPS (earnings per share) stood 119% higher than its 1Q16 adjusted EPS. Shell saw across-the-board increases in earnings in its Upstream, Integrated Gas, and Downstream segments.

Shell began operations at P-66 FPSO in the Lula South field in Brazil. Shell is set to emerge as a profitable player in the scenario of rising oil prices. For more on this topic, please read Is Shell Rejuvenating with Its Robust Upstream Portfolio?

Shell’s moving averages

Currently, Shell (RDS.A) stock stands above its 50-day and 200-day moving averages. However, the fall in WTI prices has started affecting Shell’s stock performance. After the OPEC meeting, Shell stock fell 1%.

Shell’s 50-day moving average stands 3% above its 200-day moving average. If oil prices continue to slide, the trend could pressure Shell stock. Shell’s 50-day moving average could break below its 200-day moving average—a bearish technical sign—which could cause an acceleration in the stock’s fall.

For an analysis of oil prices, please read Fed’s Meeting: Will Crude Oil Prices Collapse?

In the next part, we’ll review why most analysts have given positive recommendations to Shell.


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