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Energy Sector Outlook

Energy Sector Outlook

| April 03, 2024

Some reasons why we like the energy sector right now..

• Oil just broke above a key technical level at $83, leaving $95 as the next potential technical target. The sector looks good technically as well, as illustrated below.

• April is the best seasonal month for the energy sector going back 40 years (source: Ned Davis Research).

• This market looks like it wants to rotate away from the big technology winners. Cyclical value is a logical place to go, including energy (potential industrials as well which have started to look more interesting).

• Valuations are attractive. Producers’ increased focus on cash flows provides valuation support.

• Earnings revisions are best among all S&P sectors over the past month. Earnings season is right around the corner, and the sector looks poised for solid upside.

• The sector can offer some protection against rising rates and sticky inflation.

• A treacherous geopolitical environment offers potential upside to oil prices (unfortunately).

#energy #oil #stocks #risingrates #inflation