This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

7 Stocks to Benefit Off Higher Oil Prices

WINDERMERE, Fla. ( Stockpickr) -- Here we go again. Crude oil is closing in on $100 a barrel, and it's happening faster than I think most traders want to believe.

Recently, crude oil traded through the $90 level, which marked a 26-month high. The bulls in the crude market are saying that oil is experiencing a "demand shock" due to consumption growth, which this year is almost at its highest rate in 30 years. The bulls will tell you that demand is being driven by a recovery in global economies from the depression-like levels we've seen in the last few years. Many analysts will also tell you that crude oil demand is being spurred by emerging market expansion in China, India, Brazil and the Middle East.

What's really interesting about the current strength in oil is that it's happening in the face of a strong dollar. Usually, commodities that are dollar-denominated trade lower when the dollar strengths. However, that's not what we're seeing right now with crude oil. It's trending higher despite the fact that the dollar has been strong, and I think this has caught a lot of market players off guard.

Whenever I see a market decouple like this, or a stock do something that nobody thinks is possible, I revert back to my trend-trading acumen and remember that price always pays. If you've been shorting oil hoping for it to drop based off of the action in the dollar, then you've been fighting the trend. Since early November, the dollar has soared from its lows around $75.60 to its most recent highs at over $81. During the same time frame, crude oil initially sold off from $88 a barrel to around $80, but instead of continuing that trend lower, it bounced huge and rallied from $80 to over $90 a barrel.

Why is oil trading so strongly despite the strong dollar? There are probably a number of solid reasons for the strength in oil, such as quantitative easing, which many traders view as an inflation-causing policy. Market players could be bidding up the price of oil in anticipation of more quantitative easing (QE3) that could be coming down the road. We also have a war premium in oil that could have re-entered the equation following North Korea's most recent hostile actions towards South Korea on Yeonpyeong Island.

1 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,270.78 +113.93 0.66%
S&P 500 2,010.31 +8.74 0.44%
NASDAQ 4,587.8890 +25.70 0.56%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs