A recovery in crude oil prices after Monday’s slump was enough to boost Shell share price and other oil stocks, despite a host of other unfavourable fundamentals. Price on the Brent crude benchmark had fallen for two days straight, with Monday bringing a 3.43% decline in oil prices. This negatively impacted the Shell share price, sending it into a steep 5.19% decline.
However, this Tuesday’s recovery in oil prices also brought a comeback at the Shell share price. The bulls fought off an initial decline at the 2076.0 support, preserving marginal gains on the stock.
However, a slew of negative triggers may put the price back under pressure. Egdon Resources said in a Tuesday statement that Shell was intent on withdrawing from the Resolution and Endeavour gas discovery in the North Sea and would exit the 1929 and P2304 licenses.
Shell is also facing pressure from environmentalists. Friends of the Earth has asked the company to respect the ruling of the Hague District Court that had ordered the company and its partners to cut its carbon emissions by 45% in 2030.
In Nigeria, the company also lost an appeal against a judgement that had ordered it to pay hundreds of millions of dollars to a family whose patriarch was executed by the military regime in the mid-90s. The company was also prevented from selling any of its assets until the determination of an appeal against a $2bn judgement awarded against it as oil spill damages in Nigeria’s Niger Delta region.
Technically speaking, the correction seen last week is due to the breakdown and completion of the rising wedge pattern, as seen on the daily chart. However, the measured move is yet to be completed as the bulls managed to save the 2076.0 support. Therefore, only a breakdown of this level allows for the resumption of the measured move, even as the Shell share price gains 2.46% on the day.
The bounce on the 2076.0 support preserves its integrity. However, this bounce violated the 2125.5 resistance, and the hammer candle formed now sits on this support. An extension of the bounce is required to send the price activity towards the 2218.0 resistance (22 April high). The 2259.5 resistance (19 April high) is the price target to beat for the bulls if the price is to extend to the 13 January 2020 high at 2311.5.
On the other hand, a breakdown of the support at 2125.5 makes 2076.0 immediately available as a new upside target. A breakdown of this pivot opens the door for a slide towards the 2000.00 psychological support (site of the 23 March low). Further southbound targets are found at 1948.5 and 1882.0 (28 January and 15 March lows). Finally, 1809.5 (26 October 2021 high in role reversal) becomes a new target if the breakdown move from the rising wedge is more extensive.
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This post was last modified on %s = human-readable time difference 18:25