Oil to Hit $100: Good for Stocks, But Economic Damage 'Baked In'
finance.yahoo.com
Posted Jul 18, 2008 01:31pm EDT by Aaron Task in Investing, Commodities, Recession
Related: XLE, OIH, OIL, XOM, COP, CVX, SLB
After suffering an 11% drop in three days, crude prices rebounded back above $130 on Friday. But "the commodity trade is over" and oil is likely to hit $100 sooner rather than later, says Scott Bleier, president of HybridInvestors.com.
Bleier's view is that the bulk of oil's rise has been driven by Wall Street's penchant for taking trades to the extreme, and now traders are looking for "something new" to put their money into.
As with last time, Bleier and I disagree on the role of speculation vs. supply/demand in oil's rise, and, in the accompanying video, he's quick to dismiss the effect President Bush reaching out to Iran is having on crude.
One area where we do agree: A sharp decline in oil prices would likely help the stock market near-term (save energy stocks, which rebounded Friday amid strong results from Schlumberger); but it won't help the economy right away. The damage from higher commodity prices is "baked in" for the next six to nine months, he says. |
