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Royal Dutch Shell Q1 earnings preview

Decade-low oil prices and tightened refining margins mean this will be a rough quarter for Shell, but can it beat estimates like rival BP just did?

On a short term basis, investors in Shell are looking at revenues from production, refining and trading as well as cost reduction and capex plans. Revenue is expected to be squeezed in both upstream and downstream businesses so Shell’s best chance of beating expectations may be through trading volatile oil prices and reducing costs.

Cost cuts are a hot political potato for Shell given the extra layer of cuts required to drive ‘efficiencies’ with the BG merger. It has just announced it is closing the BG Group head office and has previously said it would cut 10,000 jobs.

Shares are up around 25% since the multi-year low in mid-February in sync with an over 50% rebound in Brent crude oil. Shares of the integrated oil companies didn’t fall as much as oil during the decline and are underperforming on the way up. Still, a long term investment in Shell is a bet that oil prices continue to trend higher.

Shares have broken above 20 and 50 day moving averages and the RSI has moved above 50, showing bullish momentum. Confluences of resistance at 1830 then 1990 are bearish obstacles to overcome.

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Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.