Shell
Shell
SHEL
1.44%
48%
- Trades just below 56.23 buy point after rebound from 21-day support.
- Bullish base-on-base structure has firm support at 50-day line.
Industry Group Ranking
Emerging Pattern
Flat Base
One of three positive chart patterns to look for when doing technical analysis. It usually occurs after a stock has advanced off of a “cup with handle” or “double bottom” pattern. The “flat base” moves straight sideways in a fairly tight price range for at least five weeks and does not correct more than 15%.
Major oil-and-gas producer Shell (SHEL) is the IBD Stock of the Day. Shell stock is close to breaking out of a base.
XThe setup arrives after Russia's invasion of Ukraine drove energy costs higher and, after some early missteps, Shell joined other energy leaders in exiting all of its operations in Russia. But questions remain about the impact from China's recent Covid lockdowns, efforts to lower gas prices and whether those efforts can effectively provide any relief for consumers.
Shell Stock
Shell rose 1.4% to 55.72 in the stock market today. Shares are just below a 56.23 buy point, after rebounding from support at the chart's 21-day exponential moving average.
The seven-week flat base is actually a base-on-base chart pattern. That is a bullish construction. Shares have a 98 Composite Rating. Their EPS Rating is 77.
Shares are up 38% over the past 12 months. The stock's relative strength line has seesawed recently as it consolidates.
Oil prices dipped on Friday. West Texas Intermediate was down around 0.5% to $99.76 per barrel. Crude prices were on pace for their steepest weekly drop in some two years, after topping $114 on March 23, according to FactSet.
Opening Up Reserves
The slide comes as member states of the International Energy Agency on Friday agreed to release oil from emergency reserves. The move is part of an international effort to lower oil prices following a wave of sanctions on Russia. Russia is a major oil producer and exporter, and supply and market disruptions linked to sanctions and Russia's attack on Ukraine have driven oil prices higher.
The agency said details of that emergency move would be disclosed early next week. The group's 31 member nations have an emergency stockpile of 1.5 billion barrels.
However, the IEA, in a statement, said that Russia's invasion was "taking place against a backdrop of commercial inventories that are at their lowest level since 2014 and a limited ability of oil producers to provide additional supply in the short term."
Along with Shell stock, Exxon (XOM) reversed early gains and slipped 0.2% on Friday. The IBD Big Cap 20 leader is in a buy zone as it rebounds from 10-week support. BP (BP) rose 0.8% and was consolidating.
A day earlier, President Joe Biden authorized the release of 1 million barrels per day from the U.S.' Strategic Petroleum Reserve. That release will last for six months, amounting to more than 180 million barrels.
"This is a wartime bridge to increase oil supply until production ramps up later this year," Biden said Thursday. "And it is by far the largest release from our national reserve in our history."
China Covid Outbreak Could Affect Demand
But analysts have said the U.S. efforts to open the spigot wouldn't significantly lower prices. Some have said persuading Saudi Arabia to increase production would carry other political complications.
China's recent quarantine measures could potentially reduce energy demand. That, in turn, could potentially ease some of the price pressure that is currently threatening to destroy demand in the U.S. Shell executives are among of a group of six big oil names set to testify before a House hearing next week, looking into allegedly disproportionate increases in gasoline prices.
Analysts who follow Shell stock expect the company's earnings to jump this year. They see earnings per share rising 61% to $8.04. They see sales jumping 40% to $365.5 billion.
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