Shell Group (SHEL.US) indicated that its fourth-quarter oil trading performance has significantly worsened due to falling crude oil prices. In a trading update released on Thursday ahead of its financial report scheduled for early next month, Shell stated that oil trading results for the fourth quarter are "anticipated to be substantially lower" compared to the previous three months. The company's struggling chemicals division is expected to post "significant losses," with its performance for the quarter falling below the break-even point. This update comes as oil markets grapple with a supply glut, potentially setting the stage for a more challenging trading environment in the coming months. Last year, the international benchmark Brent crude price plummeted by 18%, largely unaffected by the turmoil in Venezuela—where President Nicolás Maduro was reportedly captured by U.S. forces. Shell's vast internal trading operation deals in oil, natural gas, fuels, chemicals, and renewable energy—trading both the company's own products and supplies from third parties. The energy giant does not separately disclose the performance of its trading business, but its results are closely watched as a key driver of profitability. Strong trading performance in the third quarter was one of the factors Shell cited for its better-than-expected earnings at the time. CEO Wael Sawan has been focused on cutting costs and divesting underperforming assets to strengthen the company's balance sheet. Shell's stock ranked second in performance among the world's top five oil majors last year, behind only ExxonMobil, but its gains faded after peaking in mid-November, ending the year with an increase of less than 11%. Adding to the uncertainty, traders are still assessing the broader market implications following the reported capture of Venezuelan leader Nicolás Maduro by U.S. forces over the weekend. In the third quarter of 2025, Shell had been preparing preliminary work to resume operations at an offshore gas field in Venezuela to supply natural gas to neighboring Trinidad and Tobago. At that time, Shell was growing increasingly confident that the Trump administration would issue a new license, exempting the project from sanctions. The U.S. has now stated that it has taken control of Venezuela's oil industry and claims that U.S. companies will invest billions of dollars in the country. In the natural gas sector, Shell expects its trading performance for the current quarter to be in line with the previous period. Shell is the world's largest liquefied natural gas (LNG) trader and solidified its position in 2025 with the startup of the massive $29 billion LNG Canada terminal. The LNG Canada project commenced operations last summer and is currently ramping up production. The company forecasts that global demand will grow by approximately 60% by 2040. Concurrently, Shell challenged its loss in an arbitration case against U.S. LNG exporter Venture Global Inc. in November, following a similar victory by BP. In August of this year, an arbitration panel ruled in favor of Venture Global in a dispute related to the company's failure to deliver LNG cargoes from a Louisiana plant to Shell under long-term contracts. Weeks later, Venture Global lost a similar dispute with BP. Shell's oil and gas production saw a slight increase this quarter, including output from its new joint venture Adura North Sea with Equinor ASA.
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