What’s going on?

• Shell’s Q4 earning missed analysts’ expectations with an 87% drop in profit
• But its dividend is upped.

What does that mean?

• 2020 was hard for oil companies, with ongoing travel restrictions. 
• Shell’s feeling surprisingly optimistic about the scenario of economic recovery by the 2nd half of 2021 with the vaccine.
• Shell reckons things will be completely back to normal by 2022 and reassure investors by boosting dividend payouts by 4%.

Why should I care?

For markets: Shell knows it is not the only one

• There were some early signs of improvement for energy companies in Q3/2020, but only to later disappointment: Exxon, BP, and Chevron have all reported weaker-than-expected results.
• Similarly, all sectors are forecasted to see the biggest drop in earnings.

The bigger picture: ‘Going green’ might not be everyone’s favorite term

• Not only with the pandemic, oil companies are also struggling with the transition away from fossil fuels too, which might happen faster than expected thanks to an eco-conscious new US president:
  • the Paris climate agreement is rejoined,
  • the Keystone Pipeline permit is destroyed, and 
  • new oil and gas leases on public land are suspended.
• That might be why shares of oil stocks have underperformed the global stock market by 6% since Joe’s inauguration.

Content source: Finimize (2021) Pump Slump. Available at: https://www.finimize.com/wp/news/pump-slump/ [Accessed on February 5, 2021]