Royal Dutch ShellS
the stock fell 6% months as most oil released a disappointing update, and oil prices fell amid fears of a new strain of coronavirus causing Covid-19.
The Anglo-Dutch company said it would mark the value of assets by $ 3.5 billion and $ 4.5 billion in the fourth quarter, taking total expenses this year to over $ 22 billion. Fourth quarter taxes on its Appomattox asset in the US Gulf of Mexico, the closure of oil refineries and onerous liquefied natural gas contracts.
He added that the adjusted gains would show a loss in the “current price environment”. The results of its marketing activity, which helped the company to return to profit in the third quarter, would be “significantly lower” in the fourth quarter, along with the results of oil trading.
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The world’s largest oil and gas companies suffered this year, with record losses in the extremely harsh second quarter as the Covid-19 pandemic decimated global demand. Shell cut its dividend by two-thirds in April – the first cut since World War II, underscoring the scale of the crisis.
The energy giant listed on the FTSE 100 fell $ 16.8 billion in the second quarter as it narrowed its long-term outlook for oil prices and revised assumptions about future energy demand. After a better performance in the third quarter, the company recorded a reduction of 1.1 billion dollars. The evolution of the Covid-10 vaccine in recent months has also boosted demand and oil prices, as well as Shell shares in recent months.
However, Monday’s update, along with falling oil prices, dampened optimism again. Concerns about a new strain of coronavirus in the UK, which Prime Minister Boris Johnson said could be 70% more communicable, have lowered oil prices. Several European countries, including France and Italy, have suspended travel to and from the UK, raising fears of oil demand. Gross futures fell 3.4% to $ 50.51, and West Texas Intermediate gross futures fell 3.5% to $ 47.55. Rival actions
fell by 5%, while the French energy giant
decreased by 4%.
Read:Royal Dutch Shell surprises with an increase in dividends after earnings
The difficult situation of the industry in 2020 has served in particular to accelerate the transition to green energy and a low-carbon future. BP, Total and Shell have developed all strategies to become net zero carbon by 2050. Investors will be watching closely in February, when Shell will provide an update on its green transition strategy.
Looking ahead. RBC Europe analyst Biraj Borkhataria said Shell’s guidance in the fourth quarter was disappointing, especially in the strong context of the company in recent weeks, but insisted it was not a long-term concern.
“While this is disappointing and could have an impact on short-term performance, we do not believe it will materially change the investment case in 2021,” he said. He also expected Shell to provide further details on a “measured transition strategy” in February. RBC maintained a higher performance rating of the stock, with a target price of 2,000p.
Vaccine optimism has led to oil prices, and the sector’s stocks rose in November and most of December, but the reality has hit now. The road ahead, at least until the full impact of the various vaccines materializes, will be a bumpy one.