What $50 Oil Means for Energy Stocks

"Lions and tigers and $60 oil. Oh my!"

That appeared to be the reaction of some energy stock traders on Tuesday as exploration and production as well as oilfield service stocks took a tumble when oil prices began to come back to earth after two devastating hurricanes.

What if I told you that, absent another major storm, I believe oil will pull back to $50 in the next several weeks? (Of course, instead of a storm there could be a supply disruption in the Middle East. Or just maybe civil unrest in Nigeria. Hmm, possibly budget problems in Mexico. Additional challenges to energy capitalism in Russia? Perchance supply problems in Venezuela?)

But, just for a minute, let's forget about all the possible supply issues that could surface, and assume production is "back to normal" in the next several weeks and oil prices return to some "rational" level in the $50 range. ...