The Lookout | Week of December 05, 2022

The Lookout | Week of December 05, 2022

This week will be an important one for the energy sector with several important industry-related figures set to be released. To help investors make sense of what’s going on in the world of energy this week, Simon Lack of SL Advisors provides insights into what he’ll be watching.

Major Market Events:

Tuesday, December 6: US EIA Short-Term Energy Outlook & GBP Composite PMI

Wednesday, December 7: US Crude Oil Inventories & CAD BoC Interest Rate Decision

Thursday, December 8: US Initial Jobless Claims & EUR ECB President Lagarde Speaks

Friday, December 9: US PPI (MoM) (Nov)

Simon Lack, Portfolio Manager of an Energy Infrastructure Fund, SL Advisors:

• For the prior two months, producer prices have risen and are projected to rise another 2% in December. Going forward we predict a lower PPI inflation reading as annual prices are likely to decelerate from the 8.0% annualized rate reported in October. If this happens, CPI will likely follow suit.
• The first contraction in factory activity was revealed when the PMI numbers showed a decline to 49 from the 50.2 reported in October. This is the first drop since May of 2020 and came as a surprise since expectations were around 50. This could be due to the rise in unemployment, a decrease in supplied deliveries, and an increased backlog of orders. These all suggest a looming economic slowdown.
• The EIA is projecting an increase in renewable usage for next year, but also expects natural gas production to be 3% higher this winter. If the weather turns unseasonably cold, this will likely boost demand further.