Three Oil Stocks Poised for a Rebound

For the last month and a half or so, the pieces I have written here have been focused on my prediction that stocks and energy commodity prices would go through a rough patch, and on how to deal with that.

I still believe that stocks could move lower still, but crude seems to have found a bottom at around $60 for now. That, and the fact that energy has attracted some interest as a safe haven sector as more adventurous areas such as tech have led the market down, has resulted in energy beginning to outperform over the last few days. However, the comparative chart still shows that XLE, the SPDR Energy Sector Fund, is underperforming SPY, the S&P 500 tracker, on a 1-month basis.

All of that, plus the fact that most of the big energy companies will be reporting earnings over the next couple of weeks, leads to the conclusion that now is not a bad time to be shopping for some value in oil stocks.

There is, of course, still uncertainty about the impact of tariffs, and in particular the escalating trade war with China, the world’s largest oil importer. However, the “on again, off again” tariff announcements so far suggest that President Trump is using them as a bargaining tactic more than anything, and if that is the case, triple digit import duties on goods traded between the two countries will be history long before they have a significant negative impact on the Chinese economy.