Adds analyst comment in paragraphs 6-7, Shell shares in paragraph 8

By Shadia Nasralla and Stephanie Kelly

LONDON, Jan 8 (Reuters) - Shell SHEL.L expects a loss in its chemicals and products business in the fourth quarter due in part to "significantly lower" trading results, the energy giant said in a trading update on Thursday.

It, meanwhile, kept its oil, gas and liquefied natural gas output forecasts within previous guidance.

In addition to the hit from poor trading results, Shell said its chemicals and products segment's earnings will be dragged down by chemicals margins seen to be falling to $140 a metric ton from $160 in the third quarter as well as a tax adjustment.

Energy majors do not typically divulge detailed results of their trading divisions, saying that publishing such details would reduce their competitive advantage.

Shell's chemicals and products business last recorded a quarterly loss in the final three months of 2024.

ANALYST PREDICTS HIT TO EARNINGS ESTIMATES

RBC analysts said they expected the revised outlook to weigh on earnings estimates and predicted Shell would exceed its targeted shareholder payout ratio of 40% to 50% of cash flow from operations over 12 months. The ratio stood at 48% in the last quarter.

"The question is whether the board/management team is willing to look beyond a particularly weak quarter and hold the line on the buyback at $3.5 billion, given a strong balance sheet," RBC said.

Shell shares fell 1.7% by 0814 GMT, underperforming a broader European energy sector .SXEP. that dipped 0.9%.

OUTPUT TO STAY WITHIN PREVIOUS GUIDED RANGE

Fourth-quarter, oil-focused upstream production was expected to remain within the range of previous guidance at about 1.84 million barrels of oil equivalent per day to 1.94 million boed, Shell said. In the third quarter, it produced 1.83 million boed.

Integrated gas production was also forecast to be within previous guidance at 930,000 boed to 970,000 boed, it added. The company produced 934,000 boed in the third quarter.

Shell expects to liquefy between 7.5 million tons and 7.9 million tons of LNG, within a previous forecast of 7.4 million to 8 million tons.

It forecast its indicative refining margin to rise to $14 a barrel in the fourth quarter from $12 in the previous quarter.

(Reporting by Shadia Nasralla and Stephanie Kelly;
Editing by David Goodman and Joe Bavier)

((shadia.nasralla@tr.com))