Shell is slated to give the market its quarterly trading update on Friday, with analysts at Jefferies Investment Bank expecting a downbeat tone.
“We see some downside for both Shell and BP ahead of their respective trading updates as the companies may warn about the challenges faced by their gas trading businesses during the quarter (falling volatility for most spreads),” Jefferies analyst Giacomo Romeo said.
“Additionally, BP will be impacted by downtime at Whiting and Freeport LNG. GALP should continue to disclose incremental details on the Namibian discoveries.”
More broadly, the Jefferies analyst gave a dim view of the sector’s prevailing economics.
“We expect sector earnings to decrease -13% q/q, implying a 9% downside to current consensus levels,” Romeo added.
“Gas prices mark to market will guide earnings revisions; but we also expect the performance of gas trading businesses also to be impacted by the material fall in regional and time spreads volatility.
“As we look at 2024, at strip prices, we see the sector facing an ~11% earnings downgrade risk (it was around 20% at the beginning of the year).”
Elsewhere, all eyes will be on the US jobs report.
Deutsche Bank analyst Galina Pozdnyakova expects gains in payrolls to cool to +200k in March from +275k last month, which is in line with the wider Wall Street consensus.
The market expects the unemployment rate to remain at 3.9% (Deutsche expects a fall to 3.8%) and hourly earnings growing at a faster pace of 0.3% month on month, up from 0.1% .. read the preview
Announcements due
Trading update: Shell (1Q)
AGMs: Faron Pharmaceuticals
Economic announcements: Halifax House Price Index (UK), S&P Global Construction PMI (UK), ONS Real-time Economic Activity and Social Change (UK), Non Farm Payrolls (US)