After recording results, what's next for Shell's stock price?

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Shell's record profit streak: over? Oil giant posts successive quarterly record earnings, triggering calls for a windfall tax amid a cost-of-living crisis. A third-quarter update may show that the bull run has halted.

Oil major Shell (SHEL) has hinted that its streak of quarterly profit increases may have finally come to an end in a statement released ahead of the company's third-quarter report next week. The largest oil and gas company in Europe reported lower-than-expected refining margins of $15 per barrel in the three months ending in September, down from $28 per barrel in the prior quarter. Assuming that holds actual, adjusted earnings for July-September will decrease by between $1 billion and $1.4 billion compared to the previous three months.

However, that's not the end of the terrible news. As worldwide demand for plastics declines, so too does margins at Shell's chemicals division, which went from $86 per tonne in the previous quarter to a projected minus $27 per tonne. Earnings from its integrated gas business are also projected to be much lower, the world's largest dealer of liquefied natural gas said. That was blamed on "volatile and dislocated" market conditions and weaker seasonal demand.

This is uncompromising news for investors to take. The tides have been rising for Shell. Earnings for the quarter ending in July were announced at $11.5 billion, an all-time high that surpassed the $9.1 billion earned in the first three months of the year and more than double the $5.5 billion earned in the same period a year earlier. Shell rewarded its shareholders with a $6.5 billion share repurchase programme on top of the $8.5 billion repurchased in the year's first half.

Investors want to know whether this is a harbinger of the end of the company's record earnings streak or whether it is just a temporary setback. However, suppose weaker gas trading and lower margins in refining and chemicals become the norm. In that case, profits will continue to take a hit, and the stock price and dividends that investors have grown to rely on could suffer as a result.

Nothing Shell can reveal about their intentions for renewable energy sources would be of great interest. As its largest low-carbon energy acquisition to date, BP's (a competitor) planned $4.1bn purchase of a US-listed biogas producer implies it aims to accelerate its push into cleaner fuels. Shell's acquisition of a Nigerian renewable energy supplier is the company's first foray into Africa, following acquisitions in India and the United States during the previous year. Although Shell has a checkered history with Nigeria (they were the first business to find oil there in 1956), the country is a massive market, and this acquisition might put Shell in a solid position to spread out renewable energy on a continent where 43% of the population lacks access to power.

This Thursday, Shell will release a quarterly financial update (27 October).

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