Editor’s Note: The stock market will be closed tomorrow, April 7, in observance of the Good Friday holiday. The InvestorPlace offices and customer service department will also be closed. You will receive your next Market 360 article on Saturday. We hope you enjoy the long weekend!
April is one of the strongest months of the year for the stock market.
According to Bespoke, April has been the strongest month of the year for stocks for the last 20 years.
Since 2003, the Dow has achieved an average gain of 2.18% during the month of April. And since 1973, it’s posted an average gain of 2.09% in April.
The S&P 500’s performance is even more impressive…
The index has posted a gain in April – and for the rest of the year – 100% of the time after a year when it was down more than 10% and then up in the first quarter of the following year.
I don’t need to remind you that last year, the S&P dropped a whopping 19%. And despite the volatility in the first quarter of 2023, the S&P still ended the first three months of 2023 up 7%.
This bodes well for stocks. And in light of the recent OPEC+ news, that is especially true for our energy stocks.
In today’s Market 360, I’m going to shed light on this week’s OPEC+ announcement, what it means for the energy sector… and how you can best position your portfolio as we head into the spring and summer months.
The Oil Market’s Tailwinds
Crude oil prices are in the midst of a seasonal spring surge.
You may recall that energy prices naturally rise in the spring and summer as demand improves, especially in the summer driving months.
Well, crude oil prices started to gradually improve last week before soaring higher to start the month of April.
In fact, crude oil prices surged 8% on Monday after the surprise production cut announcement from OPEC+.
As I shared with my Breakthrough Stocks subscribers in Monday’s Special Market Podcast, the organization plans to cut production by more than one million barrels per day starting in May. The cuts are forecast to last through yearend, with Saudi Arabia, United Arab Emirates (UAE), Kuwait, Iraq, Oman, Algeria and Kazakhstan all planning to cut production.
WTI crude futures surged past $81 a barrel on Monday in response to the news – its highest price since late January.
These shocking announcements follow Russia’s planned production cut.
On March 21, Russia stated that it plans to slash production by 500,000 barrels per day, and it is now close to fully implementing this production cut.
So, essentially, 1.6 million barrels of oil per day will be removed from the world’s oil market just as energy demand rises.
Now, these recently announced production cuts aren’t alone in helping raise crude oil prices. Turkey blocking Iraqi crude oil exports due to a dispute with Kurdish authorities will put further upward pressure on crude oil prices.
The American Petroleum Institute reported that crude oil inventories declined by 6.1 million barrels in the last week. That marked the biggest weekly drop since November.
The Energy Information Administration also reported an even bigger decline of 7.5 million barrels of crude oil, as well as a 2.9 million drop in gasoline inventories.
Bottom line: Slashed production coupled with falling inventories will drive crude oil prices higher, especially as worldwide demand increases in the upcoming weeks and months.
I should add that we are now in the midst of a seasonal spring surge, and $100 per barrel (or more) is even more likely.
My Big Energy Bet
Longtime readers know that I’ve been very bullish on energy, even when oil prices cratered earlier in the year. The thesis behind my big energy bet was simple: Higher crude oil prices would boost energy stocks’ profitability, which would lead to strong earnings and higher stock prices.
As oil prices are likely to continue to climb higher, my energy stocks are well-positioned to prosper. I’ll discuss in further detail why I remain bullish on oil right now in today’s Breakthrough Stocks Monthly Issue for April, which will be published shortly. I’ll provide a comprehensive update on the energy market… and why my big energy bet is about to pay off.
Plus, I am releasing two new recommendations. They are not energy stocks, but there is plenty of appreciation potential in these names in the upcoming weeks and months, thanks to their stunning forecasted earnings and sales growth. For the most recent quarter, the first is projected to report double-digit revenue growth and triple-digit earnings growth, while the second is expected to post double-digit revenue growth and quadruple-digit earnings growth.
Sincerely,
Louis Navellier
