Shell Shares Plummet 2.6% Amid Earnings Woes and Venezuela Uncertainty

Summary
• Shell’s stock tumbles 2.6% to $69.69, its lowest since January 2025
• Intraday range of $68.63–$69.99 highlights volatile session
• Buyback of 2.43 million shares announced amid earnings pressure
Shell’s sharp decline reflects a perfect storm of weak earnings from its chemicals division, a slump in energy trading, and geopolitical jitters over Venezuela. With crude prices down 18% year-to-date and refining margins contracting, investors are recalibrating expectations for the energy giant’s 2025 results.

Chemicals Loss and Trading Weakness Trigger Shell's Sharp Decline
Shell’s 2.6% drop stems from a dual blow: a projected loss in its chemicals and products division and a significant decline in its energy trading business. The company cited weaker chemical margins ($140/ton vs. $160 in Q3) and a tax adjustment as key drags. Meanwhile, its trading business—critical for profit margins—saw results 'significantly lower' than the previous quarter. These issues are compounded by a 18% annual drop in Brent crude prices and political instability in Venezuela, which threatens to disrupt global oil markets. Analysts at RBC and UBS have slashed earnings estimates, signaling a lack of confidence in Shell’s ability to offset these headwinds.

Oil & Gas Sector Splits as Exxon Mobil Outperforms Shell's Turmoil
While Shell’s shares underperform, the broader Oil & Gas Integrated sector shows mixed signals. Exxon Mobil (XOM), the sector’s leader, is up 3.76% on improved refining margins and conservative capital spending. This contrast highlights Shell’s vulnerability to structural challenges in its chemicals and trading divisions. Energy groups like BP and Chevron are also facing crude price pressures, but Exxon’s Permian and Guyana assets provide a buffer. Shell’s lack of a comparable high-margin upstream play leaves it exposed to near-term volatility.

Bearish Options and ETFs Emerge as Strategic Plays in Shell’s Downtrend
• 200-day MA: 71.05 (above) • 30-day MA: 73.05 (above) • RSI: 55.10 (neutral) • MACD: -0.03 (bearish) • Bollinger Bands: 70.42–75.07
Shell’s short-term bearish trend and long-term range-bound profile suggest a defensive strategy. Key support at $70.42 (lower Bollinger) and resistance at $72.74 (30-day MA) define the near-term range. The 2026-01-16 options chain offers two compelling plays:
• SHEL20260116P69: Put option with 19.26% IV, 52.52% leverage ratio, delta -0.66, theta -0.0415, gamma 0.1727, turnover 12,787. High gamma and moderate theta make it ideal for a 5% downside scenario (projected payoff: $9.69).
• SHEL20260116C69: Call option with 19.26% IV, 52.52% leverage ratio, delta 0.66, theta -0.0415, gamma 0.1727, turnover 12,787. Suitable for a rebound above $69.69, with a 5% upside payoff of $9.69.
These options balance liquidity and sensitivity to price swings. Aggressive traders may consider the put for short-side exposure, while bulls eye a bounce above $69.69.

Backtest Shell Stock Performance
The backtest of Shell's (SHEL) performance after an intraday plunge of at least -3% from 2022 to the present shows favorable short-to-medium-term gains. The 3-Day win rate is 53.56%, the 10-Day win rate is 58.00%, and the 30-Day win rate is 61.33%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 2.94%, which occurred on day 59, suggesting that while the stock tended to recover, the magnitude of the rebound was relatively modest.

Shell's Bearish Crossroads: Watch for $69.62 Support and Sector Shifts
Shell’s near-term outlook hinges on its ability to stabilize its chemicals and trading divisions. A breakdown below $69.62 (lower Bollinger) could trigger further selling, while a rebound above $72.74 (30-day MA) might attract buyers. The sector’s mixed performance, led by Exxon’s 3.76% gain, underscores the importance of asset diversification. Investors should monitor Shell’s January 16 options activity and its full 2025 results in early February. For now, the path of least resistance is bearish—position accordingly.