Another powerful day for oil as we get ready for the weekend. The precious crude made another great jump today and is getting ready to test the psychological $60 barrier next week.Yesterday we saw oil stocks making strong positive gains, even though oil sold off a little bit, and today we are seeing the same sort of price deviation. Even with oil picking up $1.79 to $59.09, the major oil companies are pretty mixed on the day, and none are showing any great signs of life.
A lot of today's mixed action from the oil players can be attributed to Chevron Corp (NYSE: CVX), which reported earnings this morning and barely beat estimates as fourth-quarter profit dropped by 9% due to falling oil prices. Shares of CVX sold off early in the day but were able to make a decent come back in the afternoon session. The stock finished out the day down 0.6% to $74.06 down $0.41. Let's take a look at the day's chart for CVX:
Exxon Mobil Corporation (NYSE: XOM), which traded up 1.3% yesterday after blowing away analyst estimates, continued to make positive advances today tacking on another 0.6% to $75.54 up $0.46. Meanwhile BP p.l.c. ADS (NYSE: BP) fell 0.2% while Valero Energy (NYSE: VLO) were up 0.4% to $56.23.
So what do I expect to see from oil headed forward?
I think that what we are going to see is that traders are going to continue to focus on the cold weather that has taken hold of most of America and keep prices strong. For now traders are banking on the fact that OPEC is going to be enforcing their recently announced production cuts. Combined with the wintry weather, I think we are going to be looking at prices up in the $60s again by the middle of next week.
I have been saying for the last couple of days that I think we have finally returned to a bullish oil market, but even I am a bit surprised that we are seeing prices test the $60 level this fast. I thought prices would be hanging out in the upper $50s at least through most of next week before starting their charge, but now I am changing my tune. I think we are going to see prices break through $60 on Tuesday of next week and if they can hold above that level through most of next week, I think we have seen the last of $50 oil.
Let's not forget we are in a historically strong time for oil. If the cold winter remains, oil will remain strong throughout the rest of the winter months, and then we will be headed straight into the spring and summer driving months where we could see oil easily headed back to where we were last summer. So, as I suggested earlier in the week, if you want to get in some "cheap" oil plays, the window is closing fast!
Have a good weekend, and we will pick this up Monday and see if oil can carry this week's strength over into next week.
A current look at oil:
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.
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Reader Comments (Page 1 of 1)
2-03-2007 @ 1:49AM
Larry P. said...
I, for one, think oil prices will top off @ approximately $65.31 per bbl before April 1, 2007This is just a prediction on my part. Hoping that it doesn't rise that high for consumer use as it is costing the relatively poor folks into going cold. Almighty forbid. Thank you.
2-03-2007 @ 3:46PM
Lyle said...
Longer term outlook fior oil and natural gas is UP.
2-04-2007 @ 7:57AM
don ruby said...
The market price for oil will continue to rise as millions of Indians and Chinese want gas for their fuel -efficient cars and mopeds. The so called 'poor' in America may just have to give up their cell phones and cable TV to afford the new reality