Shell share price sits and waits for its climate strategy update

Shell (LON: SHEL) share price has remained in a tight range in the past few days as investors focus on the upcoming clean energy strategy report. The stock was trading at the psychological point of 2,500p, where it has been at this month. This price is about 10% below its highest point this year.

Mixed period for Shell

Shell, one of the top oil and gas companies, is going through a mixed period. On the positive side, the price of crude oil has stabilised in the past few months. Brent has remained stubbornly above $80 while West Texas Intermediate (WTI) stands above $77. 

On the negative side, Shell is facing challenges in its natural gas division. The price of natural gas has tumbled by more than 80% from its highest point in 2023. This is notable since Shell is one of the biggest natural gas companies in the world.

The most recent results revealed that Shell said that its adjusted earnings in the fourth quarter stood at $7.3 billion. This performance was mostly because of its LNG trading business.

For the year, Shell’s earnings stood at over $29 billion, a big drop from the previous year’s $39.8 billion. Its adjusted EBITDA also dropped to $65 billion. Despite this drop, the company still returned over $23 billion to shareholders in the form of dividends and share buybacks.

The next important Shell news will come out on Thursday when the company will publish its clean energy strategy. 

Company insiders say that the firm will slow the pace of emissions cut as the new Chief Executive focuses on shareholder returns. If this happens, it will be a different scenario than what the company said in 2020 when it decided to slash carbon intensity by 20% in 2030 and by 45% by 2050.

Shell will join other companies that are focusing on oil and gas, which are more profitable than other clean energy alternatives. BP slowed down its transition, which explains why its stock has risen by over 3% this year. Shell has dropped by 2% in the same period.

Shell’s pivot to fossil fuel is also happening as it attempts to bridge the valuation gap with its US peers like Exxon and Chevron. While Shell has a higher dividend yield than the two, it has historically traded at a discount. It has a forward PE multiple of 9 compared to Exxon’s and Chevron’s 11.5 and 12, respectively. 

Shell, like other European oil and gas companies, has invested huge sums of money in clean energy in the past few months. It invested $4.2 billion in low-energy products in 2022 and $2.7 billion in 2023.

The biggest challenge that Shell faces is that it lost a major lawsuit in the Netherlands that forced it to reduce its emissions. It is appealing the ruling and the trial will start in April.

Shell share price forecast

Shell chart by TradingView

On the daily chart, we see that the SHEL stock price has been in a consolidation phase in the past few days. It has remained at the key point at 2,500p and is hovering at the 50-day and 100-day Moving Averages (EMA).

The Average True Range (ATR) has continued falling and is hovering at its lowest point since September 2023. It is also slightly above the ascending trendline that connects the lowest points since July 2022.

Therefore, the Shell share price will likely remain at the current level in the near term. The key support and resistance points to watch will be at 2,321p and 2,604p.