Boone Pickens insists that oil has to go to $70 a barrel this year. The supply is simply going to get too tight. Of course, a number of experts disagree with Pickens arguing the the technology for extracting oil is getting better.
If Wall Street accepts Pickens case, the stocks in Exxon (NYSE:XOM), Conoco (NYSE:COP), and Chevron (NYSE:CVX) are headed back up. When oil spiked over $70, all three stocks took a nice ride into August of last year. As oil moved back under $60 in the Fall, all three stock retreated. With oil moving up again the stocks have moved back near their highs. Before last week's big sell-off, Exxon hit $75, very near a multiple year high. If oil goes over $70, it is not hard to see the price moving over $80.
Of course, the oil companies may be among the few beneficiaries of rising oil and gas prices. If Pickens is right, the industries that were murdered with the last run up in oil will suffer again. Retailers from Target (NYSE:TGT) to Lowe's (NYSE:LOW) and the big car companies, especially GM (NYSE:GM) and Ford (NYSE:F) who need some help from the economy if their restructurings are going to work.
With the market falling and consumer sentiment on edge, is very bad news unless you own oil shares.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
3-05-2007 @ 11:18AM
Joyce Cheever said...
These oil companies play a big game with American people..We are not stupid to see what is going on. The rich dont care but us middle class suffer. We will start cutting back when the oil prices go up anymore. I hope the Bushes are smiling cant wait for that jerk to get out of the white house nobody likes him. We all know it should have been al gore that won but politics is crooked every one knows that.