Shell (GB:SHEL) released its Q3 trading update, highlighting a drop in its refining margins amid weak oil prices as global energy demand wanes. In a pre-earnings update, the energy giant reported that its indicative refining margins dropped by nearly 30%, falling to $5.5 per barrel from $7.7 per barrel in the previous quarter. Shell will publish its third-quarter results for 2024 on October 31. Shares were trading up by 1.73% as of writing.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
Shell is an oil and gas company that supplies a wide range of energy products, including fuels, oil, liquefied petroleum gas (LPG), and lubricants.
Shell Projects LNG Growth but Refining Weakness Continues
Shell expects to report an increase in liquefied natural gas (LNG) production for the third quarter. The company raised its Q3 LNG production forecast to the range of 7.3 to 7.7 million metric tons, up from the previous estimate of 6.8 to 7.4 million tons.
Additionally, Shell increased its upstream production forecast to the range between 1.74 million and 1.84 million barrels of oil equivalent per day. This marked a growth compared to its previous estimate of 1.58 million to 1.78 million daily barrels.
The upgraded forecast could potentially offset the ongoing weakness in refining margins. The company further noted that its oil products and chemicals trading earnings are expected to be lower than those reported in the second quarter. Overall, global refining margins have been squeezed due to slower economic growth, especially in China, and the addition of new refineries.
Are Shell Shares a Good Buy Now?
Overall, analysts hold a bullish stance on SHEL stock, as reflected in the Strong Buy rating on TipRanks. This is based on 12 Buy and two Hold recommendations. The Shell share price target of 3,265.10p implies 26.1% increase on the current price level.
