Shell share price forms double-top ahead of earnings

Shell (LON: SHEL) share price has moved sideways in the past few months as investors watch the price action of oil and gas. The stock was trading at 2,372p, where it has been in the past few days. This price is a few points below the year-to-date high of 2,452p. 

Shell earnings ahead

Oil and gas giants have started publishing their quarterly and annual financial results. Chevron, the second-biggest energy company in the US, provided upbeat earnings results. The company’s revenue and profits surged, pushing the company to announce a major $75 billion buyback program. 

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Shell and other oil and gas companies are expected to publish their results this week. Among the top companies to watch will be BP, Marathon Oil, and Exxon Mobil among others. Analysts expect that Shell’s revenue surged to over $41.3 billion in the fourth quarter. 

It had made more than $95 billion in the previous quarter. At the time, the company also announced a new $4 billion buyback program, which is expected to be complete by now. As such, Shell could follow in Chevron’s footsteps by announcing a new round of repurchases and dividend hikes.

The other important catalyst for the Shell share price will be the progress of its low-margin and volatile European energy market. This division needed over 1.2 billion in financial support from the parent company. Such a move will be positive for the stock but difficult for customers. In the UK, the division has over 1.4 million customers.

Shell is also facing other challenges. The UK and other European countries have announced a significant increase in windfall taxes. Earlier this year, the company said that the taxes will cost it about 1.7 billion pounds in the quarter, as we wrote here.

Natural gas prices retreat

Meanwhile, natural gas prices have plunged in the past few months and are now at their lowest levels in more than 1 year. Shell is more exposed to natural gas than other supermajors like Chevron and Exxon since it is one of the biggest players in the industry globally. 

Meanwhile, there are concerns about the company’s green investments. Unlike its American peers, Shell has invested billions of dollars in clean-energy products recently. It now owns wind and solar farms and biogas firms. Some of these investments will likely not be profitable in the near term. Shell has been forced to take these measures by a Dutch court.

Shell share price forecast

The 4H chart shows that the Shell share price has moved sideways in the past few days. In this period, the stock has formed a double-top pattern at 2,445p, which was the highest point on January 13 and November 30th. The shares are consolidating at the 25-day and 50-day moving averages. 

It has also formed what resembles a head and shoulders pattern. Therefore, the outlook of the stock is bearish, with the next key level to watch being at 2,245p, the lowest point on December 16.