This week’s Monday Macro View takes on the big question: is the global oil and gas sector deteriorating or just recalibrating? The IEA now expects upstream investment to fall 4% this year—the first drop since 2020. Investment in U.S. tight oil could decline by as much as 10%, while refining capex is touching decade lows. But look closer and the story gets more complicated. Canadian oil sands are quietly expanding, Brazil is ramping offshore FPSOs, and Guyana’s Exxon-led output is surging. But the problem is, investment is losing potency. Rising costs are quietly eroding capex impact by an estimated 8%, and companies are shifting from growth to distribution. The long-term result may not be an immediate supply crunch—but a narrowing path where tomorrow’s barrels become harder to deliver.
The Market Sentiment Tracker highlights how the macro picture is moving in fragments. U.S. consumer spending is cracking under the surface—real consumption is down, new home sales collapsed, and job growth looks fine only on paper. Europe is showing tentative improvement in business sentiment, but consumption remains stuck and car sales are plunging. In China, industrial profits are shrinking again—down 1.1% year-to-date—signaling how shallow the recovery really is. This shows we are still far away from a synchronized growth pattern that, inter alia, will provide support to oil markets.
This takes us to the oilfield services side, where STEP Energy Services is doubling down on Canada after shutting U.S. operations. It added a new frac spread to the Canadian fleet and expanded coiled tubing activity, but Q1 cash flow turned negative and debt rose to CAD 85 million. Meanwhile, KLX Energy Services is leaning into natural gas-heavy Southwest markets, rolling out Gen 2 downhole tech, and warning of cost pressure from tariffs. Liquidity sits at just over $58 million, with more downside than upside in the short term. Both companies are betting selectively on where demand still has legs—and where it doesn’t.
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