In this weekly update, Primary Vision shares important developments regarding global economy and commodity markets. The oil markets are concerned that higher M&A activity might impact the oil production negatively. Meanwhile, Chinese economy continues to show signs of resilience but US economy has some indicators flashing red. Eurozone services PMI suggests a slowdown in the sector but there are improvements on other fronts. The update shows that the confusion persists amongst the investors and traders as biases continue to shift market sentiments. The reality, however, might surprise everyone.
1. Monday Macro View: US Mergers Threaten Oil Production – PREMIUM
The Federal Reserve Bank of Dallas’ survey indicates that over 50% of shale executives foresee a decrease in domestic crude output if the consolidation trend continues. This reduction in exploration and production investment is concerning, with the number of active drilling rigs at its lowest since early 2022 and frack crew deployment halved compared to six years ago. In the oil industry, the projected decline in production due to mergers and acquisitions suggests potential upward pressure on oil prices in the medium term.
2. Primary Vision Insights – ENTERPISE
There have been some pivots lower across the market as countries reduce their imports of crude. China saw a tick higher, but this is more a restocking after sluggish imports. We don’t expect this to remain above 11M as refiners remain well below seasonal averages. When we pivot to the broader market, crude oil products are getting close to taking out the seasonal five year high as crude levels stabilize. In the U.S., we are seeing more and more banks turning to the discount window- which is something done when you are concerned about counterparty risk.
Discover this and much more in the latest update by Mark Rossano!!!
3. Pro Frac Holdings Perspective in Q1: Key Takeaways – PREMIUM
By the end of Q1, ACDC estimated that 70% of its frac spreads operated for large customers on a dedicated basis. As the contract terms extended, its revenues and cash flows stabilized. ACDC is currently trading at an EV/EBITDA multiple of 4.1x. As such how will the balance sheet of ACDC look like moving forward? And where is the stock price headed to? Read out the article to find more!
4. Market Sentiment Tracker: Mixed Signals with more downside – PREMIUM
In the U.S. Consumer confidence is projected to dip to 100, indicating diminished optimism. Retail spending grew by only 1.3% in Q1 2024, a significant drop from 5% in Q3 2023, while the PCE deflator shows a decline, suggesting weaker inflation pressures and opening the door for potential Fed rate cuts. China’s economic landscape reveals both challenges and growth. The PMI dropped to a three-year low of 49.5, signaling contraction in manufacturing. However, retail sales of consumer goods expanded by 3.7% year-on-year, showing resilience in domestic consumption. Industrial output rose by 5.6% year-on-year. The Eurozone presents a mixed economic picture. Follow the weekly Market Sentiment tracker to stay ahead of the market!
This week’s Market Sentiment Tracker tracks all the latest developments in the two largest economies of the world!
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