Shell share price outlook: should you buy this dip
- Shell share price has dropped sharply in the past few weeks.
- The decline has coincided with the recent decline of oil prices.
- Shell will publish strong quarterly results this week.
Shell (LON: SHELL) share price has dropped sharply in the past few weeks as the price of crude oil and natural gas pulled back. The stock has dropped from the year-to-date high of 2,460p to the current 2,025p, giving it a market cap to about £148 billion.
Shell earnings ahead
Shell share price has been in a strong bearish trend as investors worry about the falling oil and gas prices. Crude oil has dropped from the year-to-date high of $136 to a low of $97. West Texas Intermediate (WTI) has also moved below the important level of $100.
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Natural gas prices have also pulled back even as Europe faces a major supply shortage in the coming months. Still, traders expect that natural gas will remain at elevated levels for years to come, which will benefit Shell, which is one of the biggest natural gas companies.
The Shell stock price will be in the spotlight as the company is expected to publish its results this week. Analysts expect that the company will publish strong results since demand and prices remained at an elevated level in the first half of the year.
Analysts expect that Shell’s earnings in its integrated gas unit rose from over $1.6 billion to over $3.8 billion.
Its upstream earnings are expected to rise from $2.5 billion to $4.38 billion while its marketing earnings are expected to hit $997 million. Further, analysts expect that its chemical products rose from $989 million to $1.8 billion.
Analysts believe that Shell is a good investment, with the average target for the stock being at 2,806p. Some of the most hawkish analysts are from Royal Bank of Canada, Credit Suisse, Barclays, and JP Morgan. All these analysts believe that the stock will hit 3,000p soon
Shell share price forecast
The four-hour chart shows that the Shell share price formed a rising wedge pattern between March and May of this year. In price action analysis, a rising wedge pattern is usually a bearish sign.
The bearish breakout happened in June when the stock rose to a high of 2,460. It has now crashed by more than 16% from its highest level this year. The stock has moved below the 25-day and 50-day moving averages.
Therefore, the stock will likely continue falling as sellers target the key support level at 1,900p, which was the lowest level since March.
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