The sharp decline in oil prices and related equities could be coming to an end, giving rise to a strong period of outperformance once more decisive signs of a bottom are evident.
The slide in crude oil prices and the sharp resulting decline in gasoline prices have not yet caused a significant turnaround in consumer sentiment. This is due in part to the fact that gas prices drop much more slowly than they rise, and based on the current futures prices, we should be paying considerably less at the pump that we are.
Those who have followed and traded the crude oil market over the years know that it is always dangerous to either get complacent about crude oil’s trends, or to try to pick tops and bottoms.
At last Friday’s lows, crude oil, basis the August contract, was down $33.82 from the March 1 high. Energy stocks are now close to three-year lows, and despite the rebound last Friday, crude oil is again lower in early-Monday trading. As a result, many investors are wondering if now is the time to buy oil and energy stocks?
Chart Analysis: The weekly chart of the continuous crude oil futures contract shows that it has been bumping into the weekly Starc-band over the past month.
The United States Oil Fund LP (USO) is a very liquid ETF that tracks the spot price of West Texas crude oil minus expenses.