|Dow||+75.91 to 18,112.61|
|S&P 500||+10.79 to 2,106.63|
|Nasdaq||+33.73 to 5,011.02|
|10-YR Yield||-.004 to 1.9%|
|Gold||+$9.60 to $1,202.20|
|Crude Oil||+$2.64 to $55.93|
Bam! There’s the crude oil and energy stock breakout I’ve been predicting and preparing for since the beginning of the year!
Specifically, U.S. oil futures jumped around 5 percent to a four-month high of $56 a barrel after the Energy Information Administration (EIA) said crude supplies rose just 1.29 million barrels in the most recent week. That inventory build was far below forecasts for 3.6 million barrels, and the smallest in any week since January.
Not only that, but gasoline inventories tanked (har!) 2.1 million barrels. That’s the sixth decline in the last eight weeks, and it shows that finished product demand remains firm here in the U.S.
Result: As refiners finish up their seasonal maintenance work, they’re going to slurp up millions of barrels of crude to churn out gasoline for the summer driving season. That, in turn, means the supply glut all these backward-looking guys on CNBC have been talking about will start being drained away.
As if all of that wasn’t bullish enough, the International Energy Agency (IEA) that advises all major, industrialized nations on oil and gas market trends just ramped up its demand forecast. It says global demand will rise by 1.1 million barrels per day in 2015. That’s 57 percent more than the 700,000 BPD gain last year!
|Global demand for oil is set to soar by 1.1 million barrels per day in 2015.|
I’m not going to pretend it’s all rainbows and unicorns for the energy sector. We’ve already seen some bankruptcies among weaker oil and gas drillers, and we’re going to see some more. We’ve already seen more than 100,000 layoff announcements in the sector, and we’re probably going to see more.
“My research shows the collapse in the past several months is one of the worst on record. I’m not just talking about dollar price or percentage declines, but also in terms of negative momentum and negative sentiment. Those kinds of extremes are incredibly rare, and they often lead to dramatic, durable moves in the other direction.”
I then pointed out in early March that even as oil prices were stagnating, the “smart money” was buying up energy stocks left and right. And finally, just a week ago, I said that Royal Dutch Shell (RDS/A, Weiss Ratings: C) gave you 70 billion more reasons to consider energy stocks.
My subscribers are now making money hand over fist in select energy plays, because I told them to buy into the depths of the recent crash. That’s the good news.
But is it too late now? Is the whole run over?
The last time we had an energy sector implosion akin to this one — in 1985-86 — it didn’t end in the blink of an eye. It didn’t lead to a one or two month rally, then fizzle out.
Instead, energy stocks rallied for months and months on end! Even stodgy mega-cap names like ExxonMobil (XOM, Weiss Ratings: C) and Chevron (CVX, Weiss Ratings: C) roughly DOUBLED over the next year and a half.
Then in 1997-98, crude oil prices collapsed again due to the Asian financial crisis and the resulting oversupply of oil. Prices plunged from around $27 to around $10.
But once investors began to sniff out a turnaround — and OPEC and non-OPEC countries agreed to cut production — they dogpiled into energy stocks yet again! Chevron surged 70 percent, while Exxon jumped 75 percent!
Does that guarantee that XOM is going to double here? Or that Chevron is absolutely, positively, for certain going to take off like a rocket? No one knows the future, including me.
|“Sifting through the rubble of this crash is proving to be a profitable strategy.”|
What I do know is that these stocks were absolutely crushed. What I do know is every last drop of froth was pretty much wrung out. What I do know is that the sector got every bit as oversold, hated, and discarded as housing stocks got in the housing crash, and dot-coms got in the dot-com crash.
Now, sifting through the rubble of this crash is proving to be a profitable strategy — just like buying the survivors of those crashes proved to be several years ago. And if I’m right, this move could have a LONG way to go. Look for more details soon on additional ways I can help you profit!
In the meantime, what do you think of this move? Are you listening to the message from energy stocks and oil prices, and are you acting on those messages?
Did you buy back in the December-January time frame when I started aggressively recommend doing so, and are you enjoying the results? Or do you think that strategy is still too risky, given the longer-term outlook for energy? Definitely let me know at the Money and Markets website!
|Our Readers Speak|
Politics continued to dominate the discussion over at the website overnight, with thoughts on Hillary Clinton, Marco Rubio and other candidates being shared in reaction to this week’s announcements.
Reader Christian O. said: “I don’t think we need Clinton. We need new ideas and a fresh approach to things. We have enough smell in Washington. Give us some fresh air.”
But Reader Paul K. countered that: “Hilary as her husband was, would be a great president. She’s smart, realistic, and a much better human being on social issues than any of the Republican candidates.”
As for Reader Donald L., he said: “For voters whose main concern is economic and who are looking at Hillary and thinking Bill-Redux, a little clarity may be in order. They are two rather different persons.
“Thus far, Hillary has not shown any particular grasp of economic policy outside the conventional democrat ‘tax and spend.’ This may turn out to be a more interesting election campaign than many realize and by no means a shoo-in for any candidate.”
While we await additional candidacy declarations, feel free to keep sharing your thoughts on the slate so far. It’s clear that many of you are looking for a fresh policy direction in 2016 … with the only real question being: Who is the best person to provide it?
|Other Developments of the Day|
Bank of America (BAC, Weiss Ratings: B-) followed other banking giants with its quarterly results today, turning in net income of $2.98 billion, or 27 cents per share. That was a big swing from last year’s loss of $514 million, or 5 cents per share, and slightly ahead of expectations once you exclude unusual items.
A large decline in legal expenses helped pad the results, as did a rise in foreign exchange trading revenue. But overall sales fell 1 percent once you strip out unusual items, and weak capital markets activity outside of forex disappointed investors. The stock ended the day down about 1 percent.
Chip giant Intel (INTC, Weiss Ratings: B) also reported quarterly results in the last 24 hours. Profit came in at $1.99 billion, or 41 cents per share, compared with $1.93 billion, or 38 cents per share, in the year-ago period.
Sales only managed to inch up slightly to $12.78 billion. But analysts and investors were generally pleased with the firm’s bullish outlook for the data center business. So the stock rallied more than 4 percent.
European regulators slapped Google (GOOGL, Weiss Ratings: B+) with antitrust charges, claiming the search engine company unfairly favors its own products when responding to search requests. They’re also investigating Google’s deals with smartphone and tablet makers.
The charges won’t result in immediate monetary or other penalties. But it will intensify efforts to get Google to change business practices in Europe and/or agree to a monetary settlement.
Will they or won’t they … default, that is? Greece is teetering on the financial edge ahead of a crucial April 24 gathering of European finance ministers. If Greek officials don’t propose reforms acceptable to the rest of Europe, it may not get the latest disbursement of its $254 billion bailout program. That could lead to a missed debt payment — or in layman’s terms, default.
Want to speak out on these topics or any others? Don’t forget: That’s what the website is there for!
Until next time,