Shell's Q1 Earnings Beat Expectations, Boosted by LNG, Share Repurchases to Rise

Good morning, readers! We bring you today's top news stories from the energy sector, including an unexpected Q1 earnings beat from UK-based energy major Shell and the implications of adding WTI Midland to the Brent benchmark a year ago. Let's get started!

Shell Posts Q1 Profit of $7.7 Billion

Shell was one of the rare oil companies to surpass analyst expectations with its Q1 reported profit of $7.7 billion, buoyed by rebounding LNG production.

The energy major's cash flow rose by 6% from Q4 2023 to $13.3 billion, prompting the oil major to ramp up share repurchases by a further $3.5 billion over the next three months.

contrasting Exxon and Chevron's somewhat disappointing results, Shell timed its refinery maintenance for the last quarter of 2023, allowing its downstream segment to fire on all cylinders lately.

Under new CEO Wael Sawan, Shell has weakened its 2030 carbon targets and costs across the oil and gas business, as a result of which the company's shares have gained 14% this year.

One Year On, WTI Midland Becomes a Brent Mainstay

Exactly a year ago, WTI Midland was added to the world's most important oil benchmark, the Dated Brent, prompting a surge in physical crude transactions in both forward and dated markets.

Since the inclusion of WTI Midland in May 2023, 214 cargoes with a total volume of 149.8 million barrels have traded in the Platts window, with 138 of them being WTI Midland, boosting liquidity in the contract.

The first non-North Sea blend to be included in the Brent basket, Midland has also had a slightly depreciative effect on the benchmark, being the lowest-priced grade on 130 pricing days out of the 205 sessions so far.

The decision to include Midland has brought more robustness and transparency to the benchmark setting process and has established Platts Dubai and Tapis as the primary price references for Asian crude oil markets.

This has also benefited producers and consumers in the Midwest as it has enabled them to better participate in the price-setting process and helped to enhance the liquidity of the WTI Midland contract.

In conclusion, the inclusion of WTI Midland in the Brent benchmark has been a success, bringing more diversity and liquidity to the market and highlighting the resilience of the global oil market.

We hope you've enjoyed this morning's news roundup. Check back soon for more updates and analysis on the latest developments in the energy sector. Until next time!