This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

5 Reasons to Buy Oil Stocks Now: Opinion

OPEC Cutting Back

The recent uptick in production from the OPEC cartel was just a stopgap measure amid unrest in Libya, according to recent reports. The member states pitched in to help but clearly have no long-term interest in cranking out crude when prices remain at relatively depressed levels compared to $100-plus oil just a few months ago. You can bet that as oil prices continue to languish near one-year lows that the prospect of additional cuts will be weighing on OPEC's collective mind.

Also See: 10 Stocks That Meet Buffett's 'Golden Rule'

Middle East Unrest Persists

As the spike in oil prices this spring shows, a risk premium has been priced in to oil. Amid the so-called "Arab spring" is a boon for democracy in the Middle East, but you can bet that the push for a Palestinian state and widespread unrest in Libya, Syria, Yemen, Egypt and Tunisia (to name a few countries) is going to have a destabilizing effect on global energy markets. Higher uncertainty means higher crude oil prices.

Also See: 5 Stocks to Boom on iPhone 5 Release

Weaker Dollar is Inevitable

Most investors should be painfully aware of the inverse relationship between the greenback and oil prices. Simply put, as the dollar goes up in value, the price falls for commodities like crude (oil as well as corn and rolled steel and others). That's because a stronger dollar can buy "more" of a given commodity like crude at the same price. The strength of the dollar has been a big downward force on crude oil in 2011, but don't expect that trend to last. Given the free-spending ways and rock-bottom interest rates in America, the relative strength of the dollar will inevitably erode. Yes, the greenback has been desirable lately -- but only compared to the train wreck in the eurozone. Simply being the least worst currency is not a ringing endorsement, and a weaker greenback should hit the markets soon and once again drive up crude oil prices.

Also See: It's Not Too Late to Sell Netflix

Jeff Reeves is the editor of InvestorPlace.com. As of this writing, he owned a position in the IYE energy ETF but none of the individual stocks named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
SYM TRADE IT LAST %CHG
IYE $44.82 -1.69%
BPT $66.43 -10.53%
CVX $107.06 -1.40%
XOM $88.65 -1.06%
WHX $0.61 10.20%

Markets

DOW 18,214.42 -10.15 -0.06%
S&P 500 2,110.74 -3.12 -0.15%
NASDAQ 4,987.89 +20.7530 0.42%

Partners Compare Online Brokers

Free Reports

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