From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Commodities are off to another record year — and it’s only April!
Crude oil and friends are leading the charge as the energy-heavy CRB Index is up 34% year to date.
Oil ripped above 100 in February and has been in a corrective phase since. The energy complex remains red-hot though, with natural gas futures breaking to fresh 13-year highs this week.
While crude oil finds its footing, its derivatives — heating oil and gasoline, are coiling just beneath all-time highs and gearing up for some massive base breakouts.
We’re also seeing some bullish data points for the broader oil and gas industry as crack spreads are expanding and signaling a healthy demand for black gold. This bodes particularly well for oil refiners.
All of this price behavior is what we like to call rotation.
It’s an essential characteristic of any real bull market, and it’s exactly what we’re seeing from commodities these days.
In fact, we’re even seeing constructive rotation within commodity subgroups, like the developments we just described in energy markets.
Let’s dive in and talk about some areas in energy that we think are ready to catch some of this rotation next.