May 1, 2011

Posted by in Commodities | 0 Comments

Crude Oil Stocks

Crude Oil Stocks

Play the Crude Oil Stocks

No need to panic over crude oil stocks….YET! While the world, very much including Wall Street, remained transfixed last week by the spreading revolutionary fever in the Middle East, it was the high frequency traders and so-called “value investors” that took major action on crude oil stocks this week notably Tuesday. Crude oil flirted once again with $100 per barrel as the broad market sell-off triggered panic in the Black-Gold commodity sparking renewed investor interest with ETF’s such as UCO and OIL catching bids with many others also running on sympathy.

The United States Oil Fund which trades under the ticker USO on the NYSE was “In-Play” dictating the move up over 3% or $1.30 to close at $40.48 on twice the 3 month daily volume average triggering bullish indicators across the board as it eyes new 52 wk highs in the near distance. Meanwhile back at the well, crude oil stocks early Wednesday morning is pushing $100.15′s again up $.55 in overnight trading.

Our own feeling is that Oil and Gold penny stocks are rare species of investments that ought to be bought on dips while you are at it would not be a bad idea to add Agricultural plays into that mix either. If nothing else, the great rebellion sweeping through the Middle East shows no sign of burning itself out. Quite the contrary, its spread appears as inexorable as its consequences are unpredictable. But the stress and the uncertainty accompanying the uprisings shape up as quite favorable for oil and gold stocks.

As to where exactly the crude oil price tags are heading, a few analysts are speculating we will see averages ranging from $91 per barrel this quarter, $86 for the second quarter, $92 for the third quarter and $97 for the fourth quarter with $105 per barrel settling in more steadily come early 2012. At this pace we wouldn’t rule out any type of parabolic spike upward in the not-so-distant future.

Even at current price tags, crude oil stocks is manifestly not what the doctor ordered for this less-than-robust recovery. Keep in mind that $100 per barrel Crude would shave a full percentage point off Gross Domestic Product #’s. To darken the thought, should the price ramp up to near the $120 per barrel range that would mean yet another point out of the GDP! In summary…a rather grim forward guidance outlook along with a capital spending forecast that also seems less than bright.

StockRunway Editor

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