Infrastructure Weekly: North American Midstream & Renewable Energy Infrastructure | North America

Research evidence excerpt

Infrastructure Weekly: North American Midstream & Renewable Energy Infrastructure | North America

FoundationM

The Week in Review & Brief Notes

Energy was the top performing S&P 500 sector last week as U.S.-Iran hostilities re-

escalated, but generalist investor interest in the sector remains low. Crude oil

benchmarks (WTI:+15.3% to $82.30/bbl / Brent: +15.6% to $87.84/bbl) rose in response to

renewed strikes, with tanker traffic through the Strait of Hormuz falling once again. In

parallel, Ukrainian military strikes on Russian refining infrastructure have caused Russian

refinery throughputs to fall to >21-year lows of 3.8 MMBPD and a Russian ban on diesel

exports. Across our Energy team, however, generalist appetite to commit capital to the

sector remains low in this continued liminal state given the speed with which geopolitical

events are evolving and the wide band of potential outcomes, although refiners have been

a pocket of interest owing to depleted global product inventories and record crack

spreads.

Exhibit 2: Vessels Crossing Strait of Hormuz by Type, Unique Exhibit 3: Net Seaborne Exports of Crude Oil and Refined

Daily Count Products, U.S. and China

Source: S&P Global | Platts.

Meanwhile, the momentum factor unwind has been another key market thematic,

contributing to sharp selling pressure in semiconductor, memory and various AI

infrastructure stocks. Momentum has experienced one of its fastest drawdowns on

record (-45% in ~four weeks), with competition from Chinese/open source AI models,

state and local opposition to data center siting, and questions around the sustainability of

hyperscaler investment in AI all contributing factors. That said, AI de-grossing appears to

have materially slowed relative to June and momentum advanced >5% off the lows on