Home Stock Royal Dutch Shell share price faces a key natural gas risk

Royal Dutch Shell share price faces a key natural gas risk


The Royal Dutch Shell (LON: RDSB) share price jumped by more than 1.7% on Friday as concerns about Omicron waned. The stock also rose as investors welcomed the latest OPEC+ meeting and after the firm abandoned the Cambo oil project. It is trading at 1,651p, which is about 7.45% above the lowest level in November. 

OPEC+ meeting

The OPEC+ cartel held a two-day meeting this week. In a statement on Thursday, the cartel announced that they will continue increasing oil production gradually in a bid to rebalance supply and demand. This means that the members will add about 400k barrels of oil per month. 

The price of crude oil declined slightly after the cartel made the announcement. It then pared back the losses as investors assessed the situation. Most importantly, the members announced that the meeting would remain in “session”. This means that the members will continue paying a close attention to the Omicron variant and respond accordingly.

The OPEC+ meeting helped to ameliorate the performance of the Shell share price. The stock has declined by almost 10% from its highest point in November.

The Shell share price also rose after the company abandoned the Cambo oil project in the North Sea. The company attributed the situation to the rising opposition from climate activists and the lack of political support. 

Still, Shell faces a major challenge going forward. For starters, the company is one of the biggest natural gas miners and traders in the world. Indeed, this factor partially explains why the RDSB share price has rallied by more than 30% from August this year. 

Natural gas prices have jumped sharply as investors react to the ongoing shortage. Now, as winter sets in, some analysts believe that the price will continue the bearish trend. Indeed, the price has crashed by more than 35% since October. This fact could drag the Shell share price.

Shell share price forecast

The daily chart shows that the Royal Dutch Shell share price has struggled in the past few weeks. This trend has been because of the falling crude oil and natural gas prices and the worries of the Omicron variant. 

The stock has managed to test the 23.6% Fibonacci retracement level. It has also moved to the 25-day and 50-day moving averages. 

Therefore, there is a likelihood that the stock will resume the bearish trend as bears target the 50% retracement level at 1,300p.

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