Royal Dutch Shell B share price is down by more than 1.70% as traders wait for the outcome of today’s OPEC+ meeting. The shares have reversed yesterday’s gains after the UK became the first country to accept the vaccine manufactured by Pfizer. Similarly, BP share price is down by more than 2.70%, becoming the worst-performer in the FTSE 100.
In recent weeks, Shell share price has been on an upward trend. It has risen by more than 55% from its year-to-date low of 847p. This is partly because of the overall optimism of a vaccine, which has led to higher crude oil prices. In fact, from May this year, the price of Brent crude oil has risen by more than 195%. And from November, the price has surged by more than 33%.
Shell B shares have risen for other reasons as well. For example, analysts have recently turned bullish on the stock. In a note last month, analyst at Cowen pointed to the company’s strong earnings and its decision to lift its dividend. It also introduced a relatively lower capital expenditure plan and lifted its forward guidance.
Similarly, analysts at Morgan Stanley have also sounded bullish on the company. They noted that the decision to boost dividend meant that the management was generally optimistic about the company. Other analysts bullish on the stock are from JP Morgan, Scotiabank, Berenberg, and HSBC, as shown below.
Today, RDS.B and RDS.A shares are falling because of the ongoing meeting by OPEC and its allies. The key issue is whether the leaders will agree to extend the supply cuts in January.
While most members agree to extend the cuts, some countries like the United Arab Emirates (UAE) and Nigeria have opposed such measures. Still, analysts are generally optimistic that the leaders will agree to these cuts. In an interview yesterday, an analyst at Bank of America predicted that oil prices will soar to $60.
Therefore, with vaccination about to start, there is a possibility that oil prices will continue rising in 2021. They will also be supported by the overall weaker US dollar. So, is Royal Dutch Shell share price still cheap to buy?
On the four-hour chart, we see that Shell B share price was in a downward trend since June. As it dropped, it formed a descending channel that is shown in green. On November 2, the shares managed to breakout, leading to a 33% rally to a high of 1,360p. The price rally is still supported by the ascending yellow trendline and the 50-day and 100-day exponential moving averages.
Therefore, despite the recent pullback, I expect that the overall bullish trend will continue. If it does, the next target is the June 8 high of 1,495p, which is 15% above the current price. This uptrend will be invalidated if the price manages to move below the support at 1,212p.
