HomeMarket News The Resurgence of Oil in 2024

The Resurgence of Oil in 2024

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Oil’s Surprising Domination Over Tech: An Overview

While technology, especially AI, typically steals the limelight, the unassuming oil sector is taking center stage in 2024. West Texas Intermediate crude prices have spiked by 13% this year, outstripping the Nasdaq 100’s meager 6% uptick.

Chart illustrating WTIC outperforming the Nasdaq 100

Source: StockCharts.com

The Nasdaq 100, a weighted-average index, gives undue preference to larger companies like Microsoft, Apple, Nvidia, Amazon, and Meta, skewing its overall performance. For a more accurate representation, the Nasdaq 100 Equal Weight index removes this bias, revealing a staggering 4X advantage of oil over average Nasdaq 100 stocks in 2024.

Chart indicating WTIC 4Xing the return of the Nasdaq 100 Equal weight index

Source: StockCharts.com

A Note on Tech Investments Amidst the Surge in Oil

Although long-term tech investments hold promise, the short-term forecast for AI stocks looks frothy. Expect some turbulence in the coming weeks. Contrastingly, the oil sector’s mean-reversion trade is showing sustainability.

As Louis Navellier suggested, anticipations of market adjustments imply an upcoming shift in trends. While tech may face a bumpy ride, the oil sector’s upward trajectory appears to have more staying power.

Since proposing the investment route in oil and gas stocks back in February, the returns have been substantial. ETFs like XLE and XOP have surged impressively, significantly outpacing the S&P and tech indexes.

Chart showing XOP and XLE surpassing tech and S&P since the energy trade suggestion started

Source: StockCharts.com

Upcoming Price Surge Predicted for Consumers

According to Andy Lipow of Lipow Oil Associates, consumers can brace themselves for a forthcoming rise in prices at the pump. The transition to costlier summer-grade gasoline blends by Gulf Coast refiners is expected to push prices up by 10 to 15 cents per gallon in the next fortnight.

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