Oil, Oil, and Oil | May 11, 2018

Last week, saw a rise in S&P 500 performance. Will recent momentum evaporate as we move away from earnings season?

1st quarter earnings are projected to increase approximately 24.9%, a strong year over year increase thanks in large part to tax reform. Nearly 80% of companies are beating expectations and tax adjusted earnings are meaningfully higher.

Oil prices have increased since the announcement that the US was leaving the Joint Comprehensive Plan of Action (JCPOA). The anticipation of a decrease in oil production from Iran has buoyed oil prices, which have supported stock prices.

Iranian oil supply disruption will likely not occur for several months, however, what will come before a supply disruption is an increase in demand. As we move into the summer driving season, the demand produced should further support oil prices. This support should also bolster stock prices… at least in the short run.

 

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