Shell’s upstream division significantly contributes to the company’s earnings. Credit: Filmbildfabrik/Shutterstock.

Shell‘s refining profit margins dropped by almost 30% in the third quarter of 2024 (Q3 2024) compared with the previous three months due to decreased global demand and weakening oil product trading earnings. 

The decline – attributed to a slowdown in global economic activity and the opening of new refineries in recent months – is expected to impact the third-quarter earnings of major energy companies worldwide. 

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Shell released its trading update on Monday, providing a generally positive outlook ahead of its Q3 2024 results. 

The update saw a stronger performance in this quarter when compared with earlier expectations, mainly driven by increased volume guidance in its upstream and integrated gas divisions – significant earnings drivers for the company. 

In the Integrated Gas division, Shell revised its liquefaction volumes guidance to 7.3–7.7 million tonnes (mt), up from the previous range of 6.8–7.4mt.  

The company expects its gas trading performance to remain steady from quarter to quarter, potentially exceeding market expectations.  

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Detailed financial information for this segment was also provided, including forecasted operating expenses of $1.1–1.3bn, depreciation, depletion and amortisation of $1.2–1.6bn, and taxes ranging from $800m to $1.1bn. 

Similarly, Shell increased its production guidance in the upstream segment, expecting up to 1.84 million barrels of oil equivalent per day (mboe/d), compared with the previous range of 1.58-1.78mboe/d.  

Oil prices declined by around 17% during the third quarter, the largest quarterly drop in a year, driven by concerns about the global oil demand outlook.  

According to Reuters, Brent futures settled at $71.77 a barrel on the last trading day of the quarter.