Shell slips after warning on Q4 trading and chemicals losses

Investing.com -- Shell shares slipped on Thursday after the energy group cautioned that weaker fourth-quarter trading and losses in its chemicals business would weigh on earnings, while also narrowing its guidance for liquefied natural gas (LNG) production.

The company’s shares slid 1.8% by 08:41 GMT.

The London-based energy giant said on Thursday that trading results for the quarter would be notably below those seen in the previous three months. Oil trading represents a major part of Shell’s trading operations, alongside other refined products such as diesel.

In LNG, the company narrowed its production outlook to a range of 7.5 million to 7.9 million metric tons for the quarter. That compares with earlier guidance of between 7.4 million and 8 million tons.

Shell also flagged pressure in its marketing business, where adjusted earnings are expected to be reduced by seasonal effects and a non-cash deferred tax adjustment.

In addition, the chemicals and products division is forecast to post an adjusted loss for the quarter. The company said performance in that segment will be weighed down by weaker chemicals margins, which are expected to fall to $140 per metric ton from $160 in the third quarter. Earnings will also be affected by a tax adjustment and “significantly lower” trading results.

Jefferies analyst Mark Wilson described the update as a “small negative,” pointing in particular to pressure in the chemicals and products business.

He highlighted “significantly lower” Products trading and that the segment includes a roughly $300 million deferred tax adjustment, split between chemicals and marketing. The analyst estimates the overall update could imply “c.10% negative impact to 4Q25 net income consensus.”

"Certainly we expect a negative response today to 4Q25 trading while also noting that deferred tax adjustment due to macro outlook coupled with weak Chemicals trading underpins much of the sector balance sheet resilience analysis," Wilson added.

In upstream operations, Shell expects production to average between 1.84 million and 1.94 million barrels of oil equivalent per day, broadly in line with the 1.83 million boed reported in the previous quarter.

Integrated gas production is seen staying within the earlier guidance of 930,000 to 970,000 boed.

Shell also said its indicative refining margin is expected to improve, rising to $14 a barrel in the fourth quarter from $12 previously.

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