NEW YORK (TheStreet) -- "Big Oil" stocks such as ExxonMobil (XOM - Get Report), Chevron (CVX), ConocoPhillips (COP - Get Report) and Phillips 66 (NYSE: PSX) are all down for 2014. But a short term rally is underway as the market has strengthened recently. Here are three reasons why long term investors should be bullish on ExxonMobil, Chevron, and others.
Big Money is betting on big oil.
Institutions investors, hedge funds and others are not always right. But their buying and selling influences the market. The Commodities Trading Futures Trading Commission reports that bullish wagering from hedge funds and other Big Money types is at a five-month high. Big Money got to be that way due to superior performance resulting from superior research and superior resources, so it is wise to at least monitor what it is doing, if not follow it.
Another bullish sign: Short-term and long-term factors are favorable.Oil is around $100 a barrel again due to improving logistics. That has resulted in a short-term gain. However, the US Energy Administration just released a report predicting that oil would average $93 a barrel for 2014 and $90 a barrel in 2015. The long-term outlook is bullish due to the increasing demand for energy and the shortcomings of coal, natural gas, and alternative power. Coal is a dirty fuel source that even has countries such as China, the world's biggest consumer, vowing to reduce its dependence. Natural gas is the fuel for wealthy nations as it has soared in price and requires three sets of pipelines for delivery to the end user. As costly as natural gas is, alternative energy is even more expensive: The price for the new Ivanpah Solar Electric Energy Generating station in California is four times as much as a natural gas plant, it uses more land, and it will produce "far less electricity." There also is no better income security than Big Oil equities.