- Summary:
- In this Shell share price analysis, we explain why the stock could soon rally to 1,400p despite the recent weakness and what to expect.
The Royal Dutch Shell share price will be in the spotlight in London after the company issued an underwhelming forecast for its business. Shell’s ADR in the United States rose by more than 1.28%. Yesterday, the RDSB closed at 1,375p while the RDSA closed at 1,440p in London.
What happened: Earlier this week, BP announced that it would restart its buyback earlier than expected, helped by the recent asset sales. In response, the company’s stock price rose, becoming one of the best-performing FTSE 100 companies this week.
Yesterday, in a report, Royal Dutch Shell said that it expects to make its first profit during the pandemic in the first quarter. It attributed the strong performance to the relatively higher oil prices and the upstream business. Nonetheless, it warned that the recent winter in Texas will cost it about $200 million. In a note after the update, analysts at Barclays said:
“Overall it’s set to prove the best quarter in a while for Shell and there are clear signs of progress, but the improvement is set to be more muted than we anticipated.”
In another statement, an analyst at RBC Capital Markets said:
“Operationally, the business appears to be performing below expectations. We do not think it materially alters the investment case into 2021.”
Royal Dutch Shell share price forecast
The Shell share price has been under pressure lately. It has fallen by almost 10% from its year-to-date high as investors reflect on the recently-weak oil prices. Still, looking at the four-hour chart shows that the stock’s decline was easy to predict since it was forming an ascending wedge pattern that is shown in red.
In technical analysis, this is usually a sign that a reversal is about to happen. The price is also at the same level as the 25-day and 50-day moving averages. It also seems like it has formed a double bottom pattern. Therefore, the stock may rise as bulls target the key resistance at 1,400p.
RDSB share price chart
