Weekly Market Commentary
Cuts to Crude Oil Production
Posted on April 10, 2023
Market Commentary by Larson COO Mitchell Wood
|The Major Markets ended mostly lower last week with the Dow Jones being the lone holdout in positive territory. The Dow Jones benefited from its narrow exposure to Blue Chip Stocks that outperformed the broader Large Cap style box.|
Across the style boxes, only Large Cap Growth managed to eke out a slight gain of just under a third of a percentage point. The remainder of the style boxes saw significantly lower returns in the Small and Mid-Cap rows.
|The week opened with the news that the OPEC countries planned to cut crude oil production.|
|The nine-member group announced cuts of roughly 1.6 million barrels per day. This, combined with comments made from allies, led to an announced total reduction in output of 3.66 million barrels per day. For perspective, this total decrease represents 3.7 percent of global demand. Furthermore, it was reported that the OPEC countries anticipated crude oil prices would reach $95 by December.|
This caused the S&P GSCI Crude Oil Index to surge approximately 6.75 percent for the week, returning the index back to positive territory for the year.
As the Good Friday shortened holiday week wore on, a number of employment-related Economic Reports were released. The Job Openings report released on Tuesday showed the beginnings of the cracks within the labor market since the Fed started raising rates. The 9.9 million job openings marks the lowest reading since June of 2021. Furthermore, the 2-month loss of 1.3 million job openings stands as the largest non-covid period loss for the measure.
The week concluded with the BLS Employment Report released on Good Friday. The March reading of the Non-Farm Payroll Report saw a monthly gain of 236,000. While this did exceed estimates of 230,000, the reading still serves as the lowest monthly increase in the last 27 months. This once again pointed to emerging weakness in the employment market.
The S&P 500® Index is a capitalization index of 500 stock-designed to measure performance of the broad domestic economy through changes in the aggregate market value of stock representing all major industries. https://us.spindices.com/indices/equity/sp-500
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The MSCI Emerging Markets (EM) Index is designed to represent the performance of large- and mid-cap securities in 24 Emerging Markets countries of the Americas, Europe, the Middle East, Africa and Asia. As of December 2017, it had more than 830 constituents and covered approximately 85% of the free float-adjusted market capitalization in each country. https://www.msci.com/
The S&P GSCI Crude Oil index provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market. https://us.spindices.com/indices
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