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Shell raises dividends for the second time in six months, after first-quarter earnings outperformed forecasts

LONDON – Oil giant Royal Dutch Shell on Thursday reported slightly better-than-expected gains in the first quarter amid stronger commodity prices and rising expectations of a recovery in fuel demand.

Shell also increased its dividends by about 4%, its second increase in six months, while the oil major seeks to reassure investors that it has gained a more stable position. This is after Shell reduced its payment for the first time since World War II in April last year.

The Anglo-Dutch company reported an adjusted profit of $ 3.2 billion in the three months to the end of March. This compares to $ 2.9 billion in the same period last year and $ 393 million in the fourth quarter of 2020.

Analysts had expected adjusted first quarter earnings to reach $ 3.1 billion, according to Refinitiv.

Ben van Beurden, CEO of Royal Dutch Shell, said in a statement that the company had a “strong start to the year” and was “ideally positioned to benefit from the recovery in demand”.

Net debt was reduced by $ 4 billion in the first three months of the year, falling to $ 71.3 billion.

Shell confirmed that the massive winter storm that engulfed Texas in February had an aggregate impact of around $ 200 million on adjusted earnings for the first quarter. He had warned that this was probably the case in an update published on April 7.

Shell shares rose more than 9% year-to-date, having dropped nearly 40% in 2020.

In its outlook for the second quarter, Shell warned of the persistent “significant uncertainty” in economic conditions, with an expected negative impact on the oil and gas industry. The energy giant said sales volumes could be adversely impacted and measures may need to be taken to reduce oil and / or gas production.

“These measures are likely to have a variety of impacts on our operational and financial metrics,” said Shell.

Oil prices

The oil and gas industry went crazy last year when the coronavirus pandemic coincided with a historic shock in fuel demand, falling commodity prices, unprecedented write-offs and tens of thousands of job cuts.

Earlier this week, British oil company BP reported that first quarter net profit more than tripled, largely driven by “exceptional” gas marketing and stronger commercial performance and commodity prices. This paved the way for the energy company to announce plans to start repurchasing shares.

Oil prices have risen about 30% since the beginning of the year, as expectations of a recovery in demand seem to have offset concerns about the impact of the increase in infections by Covid-19.

International benchmark Brent oil futures traded at $ 67.66 a barrel on Thursday morning, up 0.6% in the session, while US West Texas Intermediate futures stood at $ 64.24, more than 0.5% above.

OPEC and non-OPEC allies, an influential group of producers sometimes referred to as OPEC +, reaffirmed the improvement in market sentiment this week when they announced plans to adhere to a gradual easing of supply restrictions in the coming months.

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