Oil prices have been moving higher, as the market reacted to this mornings discount rate cut by the Federal Reserve. Crude prices have pulled back a little from earlier day highs, but still prices are trading up $0.57 to $71.57. Earlier in the session prices had managed to go as high as $72.54.Oil has gotten beat up lately. Traders have been concerned that the credit concerns blanketing the market would lead to slower economic growth and less demand for oil. Another factor that has been pushing prices lower is Hurricane Dean, which is expected to close in on the Gulf of Mexico next week.
While concerns over Hurricane Dean are still on traders' minds, nothing could outdo the optimism brought on by this mornings actions by the Fed and the impact on the overall market. But don't be surprised to see some price pressures next week, especially if Dean gathers further strength on its way into the Gulf.
Along with rising oil prices, oil stocks have also been having a good day with many of the big names seeing strong gains. Exxon Mobil Corp. (NYSE: XOM) has traded up 3.5% so far today (a little after noon), Chevron Corp. (NYSE: CVX) is up 3.2% and BP Plc. (NYSE: BP) has managed to gain 2.3% in today's market.
Helping oil stocks post strong numbers today was Bear Stearns telling its clients that now could be the time to jump back into the oil service sector.
So look for a good day today in the oil sector and prices, but expect to see some more volatility as we look ahead to next week.
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.
Why do we have a weak dollar?
Holiday hiring slow for retailers
Closing Bell: What sell-off? (AIG, ABK, EPR, MBI, JAVA, ORCL, ERTS)
