Royal Dutch Shell plc operates as an energy and petrochemical company worldwide. The company operates through Integrated Gas, Upstream, and Downstream segments. It explores for, and extracts crude oil, natural gas, and natural gas liquids.
As supply and demand traders, we can see how Royal Dutch Shell (RDS.A) has been dropping for a few consecutive months creating a very strong monthly supply imbalance around $57 per share, independently from any good or bad fundamentals for the oil related company itself or the crude oil industry.
Have a look at Royal Dutch Shell (RDSA) supply and demand stock analysis below, it’s a longer term analysis based on the imbalances found on the monthly timeframe. We have a clear monthly downtrend and a very strong monthly supply created around $57.
I’ve read that some investors were thinking of buying shares of Royal Dutch Shell (RDS.A), well, as supply and demand traders it’s very clear that we should not be thinking of buying shares of Royal Dutch Shell for a very clear reason. In a downtrend, new supply imbalances are created and demand is eliminated. Why should we buy if new supply is being created and the stock is dropping like a rock following suit the highly correlated prices of Crude Oil (CL)? It makes no sense, and that’s why most traders will fail to understand and accept.
As supply and demand traders, we should not care much if Oil plunges after fails to reach a deal, or the existing oil wars and fights existing between Opec, Russia, Arab countries and the US. Oil is trading lower after Saudi Arabia slashed crude oil prices, but if we take a look at Royal Dutch Shell monthly timeframe and other oil related stocks worldwide, we will see that it was the most likely direction the oil related stock could move since we had weekly supply in control and a clear downtrend and bearish bias.
Remember that a single timeframe is not enough to make a trading decision. You must put the new imbalances into context and only trade them if a multiple timeframe analysis has been done following supply and demand rules.
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