In this week’s Monday Macro View, we look at oil’s unexpected floor. Brent has climbed 15% since May to around $68, even as OPEC+ restored supply. Diesel is the anchor: U.S. inventories are 12% below average, Europe’s ARA hub is at its lowest since 2023, and seasonal pulls from harvests, shipping, and heatwaves have kept demand sticky. Margins confirm it — diesel cracks spiked above $40 in July, now holding near $31. With refinery turnarounds and EU sanctions looming, distillates are set to keep crude from sliding into the low $60s.
The biggest consumer of oil is China, and our Market Sentiment Tracker turns there next. Growth hit 5.3% in the first half, but imports fell 3%, PMIs have contracted for five months, and households remain cautious. Infrastructure spending above five trillion renminbi has kept heavy industry afloat, yet private credit is tight and banks face defaults. Growth is likely to cool toward 4.5% in Q3 and 4.0% in Q4 — still supportive for commodities, but heavily reliant on policy.
This backdrop filters through to service companies. NOV’s Q2 saw global drilling activity down 6% and U.S. rigs falling, but LNG orders and offshore contracts keep its backlog intact. Tariff costs reached $11 million and could hit $30 million by year-end, prompting restructuring. Liberty Energy is taking a different tack — trimming frac fleets but leaning on simul-frac demand and expanding digiFleet to boost durability. Q2 revenue rose 6.7% and EBITDA 7.5%, even as free cash flow slipped. Together, both firms show how efficiency and diversification are cushioning the cycle.
There’s a lot of “holding up” in these markets — crude by distillates, China by stimulus, service firms by efficiency. But holding up isn’t the same as weakness either. It shows where the pressure points are, and where resilience is being tested in real time. Scaffolding doesn’t last forever, but while it stands, it creates space for positioning — and that’s where the edge lies.
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