In this week’s Monday Macro View, we zoom in on one of the most tantalizing but underdeveloped stories in global energy: Mexico’s shale potential. The country sits atop one of the largest shale gas reserves in the world, particularly in the Burgos Basin, which could rival Texas’ Eagle Ford. But unlike its northern neighbor, Mexico hasn’t unlocked this energy bounty—largely due to policy restrictions, water scarcity, and Pemex’s crushing debt. The question isn't whether the geology holds promise (it clearly does), but whether the political will, economic flexibility, and technical execution will align in the post-Sheinbaum era. A recent 200% surge in fracking-related spending in 2022 and modest legal reforms in March 2025 show some motion. But so far, Mexico's progress has been more inertia than ignition.
Our Market Sentiment Tracker this week explores the most important question: why did the U.S. job numbers fall? July’s net job gain of 73,000 is not just weak—it’s structurally weak, especially after downward revisions to prior months. Our focus isn’t just the numbers, but the “why” behind them: a shrinking labor pool, restrictive Fed policy, tighter credit for small businesses, and the impact of tariffs have all conspired to choke off hiring momentum. Manufacturing continues to lead the downturn with job cuts, and participation has declined again. What does this mean for energy? Slower industrial output and muted freight demand tend to soften near-term energy demand curves, while also increasing the likelihood of a Fed pivot. Translation: macro tailwinds may form for longer-duration assets and rates-sensitive investments.
The Oil Field Service is deploying strategies for a tightening North American market. Two examples. NINE reported a 2.1% revenue decline and margin compression in Q2, citing soft oil prices, shrinking rig activity, and growing tariff pressures. Its U.S. operations, especially in oil-heavy basins like the Permian, suffered the most, although international markets and gas plays like Haynesville offered slight relief. KLXE, in contrast, struck a more confident tone: while Q2 was mixed regionally—with softness in the Permian offset by strong rebounds in the Rockies and Northeast—its margins expanded significantly on better utilization, a shift toward higher-margin services, and a gas-led recovery narrative. Management sees Q3 as the strongest quarter of the year, anticipating low to mid-single-digit revenue growth and continued margin gains. However, both companies share a backdrop of financial fragility, marked by negative equity and rising net debt - something to look out for.
So where do we go from here? As this week’s data show, understanding the “why” behind movements will give you the edge. See you next week.