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Shell expects its third-quarter earnings to receive a boost from stronger trading results in its natural gas and chemicals and products divisions compared to the second quarter, the UK-based supermajor said on Friday in an update on the expected Q3 results.
Trading helped Shell and other majors active in the gas trading business to post record earnings for 2022 amid natural gas price spikes and the overall extreme market volatility in energy commodities.
But the second quarter of 2023 was not so good for trading at the supermajors, which saw their profits sink compared to the records seen last year.
Now Shell expects trading and optimization in its integrated gas division and the Chemicals & Products division to be higher for the third quarter than in the second quarter, said the company, which will publish the Q3 results on November 2, 2023.
Shell’s second-quarter adjusted earnings nearly halved from the first quarter and fell by more than 50% from the record profits for the same period last year. The company missed analyst forecasts as lower oil and gas prices, refining margins, and LNG trading impacted the supermajor’sperformance in Q2.
Shell’s adjusted earnings, the metric most closely watched by analysts, slipped to $5.1 billion for the second quarter, down from $9.6 billion profits for the first quarter and from the $11.472 billion profit for the second quarter of 2022.
The earnings for the April-June 2023 quarter missed analyst estimates of $6 billion.
The drop in profits in Q2 wasn’t unexpected, considering that oil prices averaged $75 per barrel, compared to $113 a barrel in the same quarter last year, and natural gas prices were a fraction of the highs seen in 2022.
Shell itself had also flagged a significantly lower contribution from its gas trading division in the second quarter of 2023.
Earlier this week, U.S. supermajor ExxonMobil said its third-quarter earnings would likely beboosted by $2.1 billion due to higher oil prices and robust refining margins, only partially offset by a fall in profits by its chemicals segment.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.