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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