While I'd remain cautious of physical crude
oil given the commodity's price volatility, integrated oil company stocks appear to be bottoming.
Not exact matches
So Cramer took to the charts of technician Carley Garner, co-founder of DeCarley Trading, Cramer's colleague at RealMoney.com and author of Higher Probability
Commodity Trading, to see what could give in the world of oil to push the commodity out of i
Commodity Trading, to see what could
give in the world of
oil to push the
commodity out of i
commodity out of its range.
Even if President Obama approved Keystone XL or the National Energy Board
gave the green light to Energy East, falling
commodity prices mean that soon there might not be enough
oil flowing out of northern Alberta to fill those new pipelines.
Given the collapse in
oil prices, and declines in some other key non-energy
commodities, the economy is now operating on two distinct growth tracks: the resource track and the non-resource track.
This could
give China a stake in the lowest - cost
oil producer and major exporter of the
commodity that Beijing will continue to use in growing volumes in the foreseeable future.
Among
commodities,
oil prices moved higher as fears about rising US shale production abated somewhat, and market participants began
giving more weight to the effectiveness of supply cuts by members of the Organization of the Petroleum Exporting Countries and several other large
oil - producing countries.
A slowdown in growth there has been blamed in part for the slide in
oil given that China is the biggest consumer of the
commodity.
As investors have become more knowledgeable about the markets and the influences on asset classes, the futures markets have become a guide for investors on the likely direction of
commodities, stocks and indexes on a
given day, with crude
oil futures, gold futures and the the Dow Jones reflecting investor sentiment towards the respective instruments and the direction based on the flow of information that influences supply and demand dynamics.
I would really question, though, if
commodities are just 5 % of your investment — simply investing in a S&P 500 ETF or mutual fund will
give you about 5 - 10 % exposure to
oil and natural gas simply because of the weighting of those companies in the fund.
The energy and materials sectors have been the sore spot for the high yield market,
given the anxiety over credit quality, as current low prices in
oil and
commodities, along with a Fed increase in rates, may be a cause for concern for future earnings and the cost of capital.
Energy is an interesting one, has been a difficult sector to participate in
given the volatility of the underlying
commodity, but our work currently shows that with this fairly significant run up in
oil prices up until recently, the energy stocks themselves, have not reflected it.
The oft - repeated «Canada has only one market» rhetoric ignores the fact that
oil is a globally priced
commodity, that the US Gulf Coast has the world's largest concentration of coking refineries able to optimally refine Canadian heavy
oil, and that there is likely a price discount, not a premium, from exporting to Asia,
given transportation costs.