London (Business Emerge), October 7: In the third quarter, Shell’s refining profit margins fell by approximately 30% compared to the previous quarter, as global demand weakened. The company also reported a decline in oil product trading earnings, indicating broader challenges for the energy sector.
A slowdown in economic activity worldwide, coupled with the opening of new refineries, led to a sharp decline in refining margins in recent months. This trend is likely to have a negative impact on third-quarter profits for leading energy corporations globally.
Ahead of its upcoming quarterly report on October 31, Shell announced that its indicative refining margins decreased to $5.5 per barrel in the July-September period, down from $7.7 per barrel in the previous quarter. Additionally, Shell’s chemical and oil products division is expected to report weaker trading results compared to the second quarter. During this period, Shell processed around 1.4 million barrels of crude oil per day in its refineries, accounting for roughly 1.2% of the global oil demand.
Shell, which remains the largest trader of liquefied natural gas (LNG) globally, raised its LNG production estimate for the quarter to a range of 7.3 million to 7.7 million metric tons, up from its earlier projection of 6.8 million to 7.4 million tons. The company noted that LNG trading results are expected to be consistent with the previous quarter.
Last week, Exxon Mobil (XOM.N) also issued a warning that a decrease in oil prices would impact its third-quarter earnings. In the third quarter, oil prices saw a 17% decline, marking the largest quarterly drop in the past year, as concerns grew over the global oil demand outlook. On the last trading day of the quarter, Brent crude futures settled at $71.77 per barrel.
Jefferies analyst Giacomo Romeo suggested that Shell’s consensus-adjusted earnings for the quarter could drop by about 10%, down to around $5.5 billion after the latest update. In addition, Shell revised its upstream oil and gas production forecast for the quarter, raising it to between 1.74 million and 1.84 million barrels of oil equivalent per day from the previous range of 1.58 million to 1.78 million boed.