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Shell Plunges 9% in 1Q18 So Far: What’s the Story?

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Shell stock performance compared to SPY

Royal Dutch Shell (RDS.A) stock has fallen 9.0% since January 2, underperforming the broader market indicator, the SPDR S&P 500 ETF (SPY). The ETF has increased 2.3%. Though the index has increased in the quarter so far, it was weak in February. Shell’s peers Chevron (CVX), ExxonMobil (XOM), and BP (BP) have declined 9.4%, 12.5%, and 7.9%, respectively, in the quarter so far.

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WTI trend in 1Q18

WTI prices have been quite volatile in 1Q18 so far. WTI, which rose 7.2% to $65 per barrel between January 2 and 31, fell 6.3% to $62 between February 2 and 28. WTI prices have risen marginally, by 0.3%, in March so far. Overall, WTI prices have risen 1.4% in the quarter so far.

Oil prices have risen, likely due to the expectation of an extension of production cuts by major oil-producing countries. However, an expected rise in US oil production and inventories have likely pressured oil prices. See US Shale Oil Production Could Pressure Crude Oil Futures. Perhaps due to these mixed signals, oil prices have been volatile.

Shell stock, broader market, and oil prices in 1Q18

Let’s have a look at the monthly performance for Shell stock, the broader market, and oil prices in 1Q18.

In January, WTI price rose 7.2%, the broader market (SPY) rose 4.9%, and Shell rose 3.2%. In February, oil prices slumped 6.3%, SPY fell 3.5%, and Shell stock declined 8.9%. In March so far, oil prices have risen 0.3%, SPY has increased 2.7%, and Shell stock extended its decline and has fallen 2.0%.

So Shell stock has frequently moved in line with the broader market and oil prices. But the steep decline in Shell’s stock in February has led to an overall fall in 1Q18 so far.

Also, in February, Shell posted better-than-expected 4Q17 numbers. For more, see, Shell’s 4Q17 Earnings Surpassed Estimates. However, the stock continued to fall this month.

In the next part of this series, we’ll see what Shell’s moving averages suggest.

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