Shell shares down 4% steering FTSE 100 into losses

[MongiIG]

Shell is warning that its natural gas trading and refining divisions are under stress and will negatively affect the company's third quarter release on 27 October.

 

 Jeremy Naylor | Writer, London | Publication date: Thursday 06 October 2022

Shell shares drop, steering FTSE 100 down

There's been a hefty decline in Shell shares at the open today in the London markets.

The London-listed FTSE 100 oil giant has seen its stock down almost 4% as a result of a profit warning that's come through today. The group warned that its third quarter (Q3) profits will be weakened by a sharp drop in refining margins and significantly weaker earnings from its natural gas trading unit.

Shell share price chart

Let's take a look at the share price chart because we have what is overall still a continuation of this up move here.

Shell obviously benefits from a large amount of exposure to the energy sector, a sector which is showing enormous price gains. So we have seen this uplifting show along with the rest of the oil sector.

But you can see if we look in here, this is a drop we've seen in today's session, with the stock, as I said, down almost 4% on the trading day today. And this stock is so big, it is also steering the FTSE into losses in the earlier part of the session today. Indicative refining margins have dropped to $15 a barrel in the quarter, compared with $28 a barrel in the previous three months.

You can see a really big hit to the bottom line here from the refining numbers. We'll get some more details on October the 27th when the company comes through with earnings.

You'll remember as well yesterday the Shell chief executive calling on the government to tax oil and gas companies more in order to protect the poorest people in society from soaring energy costs. That's not really anything to do with today's trade. That was yesterday. I mean in fact we saw Shell yesterday close at levels we've not seen since the 10th of June.

And in fact, if you look at the continuation of this upward move here, if we get a break of the highs we saw back on the 9th of June, we're then trading at levels not seen in a couple of years or so.

So, Shell on the way down in today's trade, the up move is in the long-term and is still in place, but the company warned about the outlook for earnings and also considering this idea that the CEO wanted oil companies to have more of a tax burden which could ultimately end up with a further indication of potential losses ahead.