Daily Brief - Black Gold Rush

TLDR: Oil prices are soaring, with Brent hitting a four-month high at $86.89 and WTI at $82.72, driven by supply cuts and rising demand.

Key to the supply-side equation is Iraq's pledge to trim crude exports to 3.3 million barrels per day, a move aimed at rectifying quota exceedances within OPEC+. Concurrently, Saudi Arabia has reported a decrease in crude exports, adding a layer of complexity to the global supply dynamics.

These actions are further compounded by the geopolitical strife affecting Russia's refining capacity, nudging the nation towards heightened export activities.

On the demand front, China's economic indicators, such as factory output and retail sales, have exceeded expectations, signaling a robust start to 2024. This resurgence in the world's largest oil importer is pivotal, given the lingering concerns over the property sector's impact on the broader economy.

In the U.S., economic resilience, reflected in strong growth and inflation dynamics, suggests a sustained appetite for oil, bolstered by strategic moves like the full operational resumption of BP's refinery in Indiana post-outage.

This confluence of tightened supply and revitalized demand has thrust oil prices into overbought territory, marking a crucial phase for investors, policymakers, and industries alike.

Market Movers: When oil is overbought

Here are the top 3 and bottom 3 performing oil stocks on a 1 month horizon when oil's RSI has historically been above 70:

Top 3 Performing Assets:

1. Occidental Petroleum: 1.18% return
2. Valero: 1.16% return
3. Marathon Petroleum: 0.93% return

Bottom 3 Performing Assets:

1. TotalEnergies ADR: -0.29% return
2. Baker Hughes A: -0.59% return
3. Kinder Morgan: -1.73% return

Asset Spotlight: Lockheed Martin volatility at a low

In the last 6 occasions where LMT's volatility was at a low, Toggle's analysis showed a median upward movement in the stock's price over the subsequent 6 months.

Additionally, when the RSI of oil enters the overbought zone, Lockheed Martin is another stock that historically often experiences upward movement over a one-month period.

Earnings Update: Micron reports tomorrow

Analysts anticipate that Micron's advancements in technology and a surge in chip pricing will likely lead to a robust earnings outcome. Specifically, the rise in DRAM and NAND prices is expected to play a significant role in exceeding the company's initial guidance for the quarter.

Micron is in the advanced stages of qualifying its HBM3E chips for use in Nvidia's next-generation platforms, indicating strategic partnerships that could enhance its market position and financial performance.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.