Oil Prices Fly Whilst Stocks Say “Whatever”
As you most likely know there was a little bit of an incident in Saudi Arabia at the weekend. Something about an Oil refinery being attacked and set ablaze, and the worlds Oil supply being disrupted.
There’s currently lots of finger pointing happening from all sides on who is to blame for these attacks, but in the meantime Oil prices have surged and are now back above the highs of early summer.
After a huge gap up at market open Brent crude oil retraced during the Europe session, but buyers arrived as the US exchanges opened later in the day pushing Brent front month to just short of $70 at the session peak.
There was a slightly more muted response from Oil stocks. Yes, most made some modest gains, but not to the extent traders were expecting.
It seems traders of Oil stocks are waiting to see if these higher Oil prices are going to hold. For a higher price to be effective on a companies bottom line a spike of a day or two won’t matter much. However if Oil prices hold high and continue to climb then we should see Oil stocks begin to respond accordingly.
If you are interested in stocks of Oil companies it could be worthwhile hunting out the producers who have managed to get Oil out of the ground at the lowest cost, and wait to see whether this Oil strength continues over the next month.
As far as news goes, we will simply have to wait for who the Saudi and US intelligence decides is responsible for the attack, and the action they take in retaliation.
At the moment everyone is looking at Iran. It’s likely they are involved in some shape or form, if not directly. Let us hope that the people in charge can work this out through dialogue and not brute force, as it would be a disaster for so many innocent people.
Pete Southern is an active trader, chartist and writer for market blogs. He is currently technical analysis contributor and admin at this here blog.
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