Australian carbon credits loophole underpins Shell stock flat performance

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Shell drops 0.73% to GBX2,985 today

Highlights

Shell's Prelude facility generated over $90 million in carbon credits over two years by leveraging a regulatory loophole in Australia’s Safeguard Mechanism credits policy.
This exploitation of policy nuances underscores substantial sustainability and earnings risks, increasing regulatory scrutiny for Shell’s Australian operations.
Shell shares face strong downward momentum, with technical indicators overwhelmingly bearish and trading expected within a GBX2,813–GBX3,156 range barring significant reversal.

Carbon credits boost earnings as regulatory loophole shapes risks

Shell's Prelude operations were able to generate over $90 million in carbon credits over the past two years due to a loophole in the Australian federal government's Safeguard Mechanism credits (SMC) policy, according to Energynewsbulletin. This action provided an additional revenue stream for Shell, while highlighting how regulatory nuances can materially affect earnings profile and sustainability-related scrutiny. The use of the SMC policy by Prelude underscores a complex risk and opportunity environment for the company's activities in Australia.

Momentum conflict as sell signals diverge from major support

On the hourly chart, SHEL is trading below the MA-20 at GBX2,998 and MA-50 at GBX3,021, while remaining above the daily MA-200 at GBX2,957. The Ichimoku Kijun at GBX3,187 serves as immediate resistance. Momentum indicators present a mixed picture: MACD signals Strong Sell, while the ADX indicates Buy, highlighting a divergence in trend strength. The RSI stands at 43.04 (Sell), Stoch RSI also signals Sell, and the CCI is Neutral, reflecting an absence of clear overbought or oversold conditions. Bull/Bear Power (BBP) is Overbought, indicating recent buyer dominance, while the Awesome Oscillator (AO) aligns with a Sell signal.

Downside favored as volatility defines short-term trading range

In the short term, SHEL is expected to trade within the GBX2,813 to GBX3,156 range, reflecting its current volatility band. The probability of a move higher is very low, while further declines remain highly likely. Baseline scenario calls for price to fluctuate within these bounds; a bullish breakout above immediate resistance could accelerate gains, whereas a drop below support would deepen the ongoing downtrend.

Anton Kharitonov, expert at Traders Union, notes Shell’s technical picture remains fragile with price below key moving averages and most indicators bearish. He underscores that regulatory developments such as the SMC policy loophole add earnings support but also elevate sustainability risk. Kharitonov sees the GBX2,813 to GBX3,156 range as a volatility corridor with a clear downside bias. "Until GBX3,187 is reclaimed, I remain cautious — sellers retain control and upward moves look limited."

Previously it was reported that Shell’s increasing engagement with carbon markets particularly through substantial credits earned at its Prelude facility, introduced a complex mix of regulatory opportunity and environmental risk. The latest price action and policy developments reinforce this high-stakes environment, so investors should closely monitor whether Shell's shares can maintain support above the long-term moving average amid heightened volatility.

Source of Data: SHEL Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.