The Royal Dutch Shell share price is rallying as investors react to the rising crude oil prices and the rising global demand. The RDSB shares ended the week at 1,487p in London.
What’s happening: 2020 was an awful year for Royal Dutch Shell and other oil companies like ExxonMobil and BP. In total, the company lost more than $21 billion as demand cratered. This year, however, the price of oil has surged, which could help the company come back to profitability.
Indeed, while 2020 was a bad year, it also had some good outcomes for Shell. For example, the company slashed its operation expenses by 12% in 2020 and there is a possibility that it will slash them further this year. As such, we could say that the pandemic helped the firm become more efficient.
At the same time, Shell’s dividend could keep rising in the near term. For one, the firm has said that it aims to return about 20% to 30% of operating cash flow to investors. This will happen when its net debt falls to about $65 billion from $75 billion. It will achieve this through several asset sales. Meanwhile, the firm could benefit from its investments in electric vehicles charging infrastructure.
The daily chart below shows that the Shell (B) share price rose to 1,515p on Friday. This was a notable level since it was slightly higher than the previous high of 1,455p. The price is also being supported by the short and longer-term moving averages and the rising Relative Strength Index (RSI).
Therefore, in my view, the shares will keep rising as bulls target the next key resistance at 1,600p, which is 10% above the current price. However, a decline below1230p will invalidate this prediction.
