Unable To Maintain Upward Bounce Seen Thursday Energy Markets Move Lower Continuing the Weeks Weak Trend

New sanction threats on Iran and Russia helped energy markets get a reversal Thursday bounce, but prices are moving lower again to start Friday’s session, continuing the week’s weak trend. The falling prices for most of the week are in contrast to a rally in equity markets, breaking the pattern of strong correlation between the two asset classes that has been in place for most of the year so far.

The April payrolls report showed an estimated increase of 177,000 US jobs added during the month, but the prior 2 estimates were revised down by a combined 58,000 jobs, adding to the warning signals from ADP earlier in the week that the labor market is slowing. The headline unemployment rate held steady at 4.2% for the month, while the less-manipulated U-6 rate ticked down 1 tenth to 7.8%. Equity and energy futures ticked up slightly in the minutes following the report

PBF reported on its disastrous Q1 Thursday showing plunging refining margins and surging costs across its network. While the West Coast was by far the worst performing region with Martinez shut for most of the quarter and Torrance needing significant unplanned repairs, the company is optimistic that it is well positioned to take advantage of market conditions when P66 and Valero shut their facilities over the next few years.

The major oil companies meanwhile are showing the value of their diversified portfolio with healthy earnings in their production portfolios offsetting the weak refining environment.

Shell reported solid 1st quarter results despite the headwinds in refining and renewables that have been well documented over the past couple of quarters. The company noted both its expansion in LNG and strong trading results in LNG that helped offset weakness in other segments. The company also highlighted that it completed the sale of its Singapore refining complex in April.

Exxon continued its strong performance, throwing off a casual $8.8 billion in free cash flow during the quarter despite the sharp drop in refining margins. The company highlighted their growth in the Permian basin and offshore Guyana as keys to their current and future results.

The EIA published a closer look at the factors negatively influencing both oil prices and refining margins in the first quarter, and noted that rising RIN values and Natural gas prices are also acting as headwinds for refiner earnings.