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.  

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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.