Daily Brief: Shell Might Bring Home Less Profit, But Not All Hope Is Lost

Daily Brief: Shell Might Bring Home Less Profit, But Not All Hope Is Lost

over 1 year ago3 mins

Oil giant Shell warned investors on Thursday that its run of record quarterly profit is about to come to an end.

What does this mean?

What benefits oil companies and what benefits the wider world isn’t always the same – that much was clear after war erupted in Europe back in February. The ensuing jump in oil prices led to a boom for the industry and handed Shell two back-to-back quarters of record profit. But the global economy’s tanked in the meantime, and all of a sudden the outlook for oil has dimmed – with prices taking a tumble from their over $120-a-barrel price back in June. Add weaker gas trading and falling demand for plastics to the mix, and it’s no surprise that Shell said its profit will probably underwhelm when the numbers emerge at the end of the month.

Oil prices fall

Why should I care?

For markets: A slim ray of HOPEC.

OPEC+, a group of oil producing nations, is less than thrilled with falling oil prices, and has announced plans to reduce supply by two million barrels a day – twice the rumored amount. Now, while that move will probably spur a recovery in oil prices, the effect might not actually be as drastic as it seems: weaker members of OPEC+ have struggled to keep up with existing production targets anyway, so the actual dent to supply could be less than the official figure suggests.

OPEC targets

The bigger picture: The grass is always greener – the future, not so much.

Many companies – including Shell – have ambitious plans to pivot to green energy, but it looks like they aren’t investing enough. According to experts, the world needs to be spending $4 on renewables for every $1 we spend on high-polluting energy by 2030. Do that, and we have a chance of reaching net-zero by 2050 – but given that we haven’t even reached a spending ratio of 1:1 yet, it’s a long shot.

Keep reading for our next story...

The Eurozone's Retail Sales Slumped Again

Eurozone image

Data out on Thursday showed that retail sales in the eurozone slumped again in August.

What does this mean?

Robust retail sales can instill confidence in a country’s consumer demand, but Europe’s dreary results will have done anything but: sales of everything from food and drink to online shopping flopped as extortionate prices forced Europeans to protect their pennies. And sure, summer travelers did get a bit happy-go-lucky at the pump, buying 5% more gas than they did at the same time last year. But that was nowhere near enough to stop total retail sales from slipping for the third month in a row, leaving them a worse-than-expected 2% lower than the same time last year. And since consumer spending is a cornerstone of Europe’s economy, this drab data will only support economists’ predictions of an impending recession.

Eurozone retail sales

Why should I care?

Zooming in: Any time now, Germany.

If Europe’s waiting for its biggest economy to pick things up, it might be left twiddling its thumbs. Separate data out on Thursday showed factory orders in Germany fell 2.4% in August from the month before, an unsettling stat for an economy that prides itself on its manufacturing industry. That’ll do nothing to reassure leading research institutes that already slashed German economic growth forecasts last week, now predicting the country’s output will be $158 billion lower this year and the next than they forecasted five months ago.

German factory orders

The bigger picture: We’re all in this together.

Europe’s been trying to fill the Russian-shaped hole in its energy supplies however it can, as fast as it can. Problem is, that frantic shopping has been pushing the price of natural gas – and the cargo boats that transport it – even higher for the rest of the world. So in an effort to solve its own energy crisis, Europe’s been exporting the pain elsewhere too, and Asia’s emerging economies – already plagued by mounting debt and weak currencies – are among the hardest hit.

Finimize

BECOME A SMARTER INVESTOR

All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

Finimize
© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG