Oil stocks could get a double boost.
Today, a Fed rate cut is expected. And this means that oil prices could continue to move higher, the AFP reports:
The Federal Reserve is expected to announce their rate decision later today, with a 0.75-1.0 percent cut widely anticipated. This would weaken the dollar and could potentially push oil prices back up, though the US economy remains weak.
Because oil prices traditionally move inversely with the dollar and interest rate cuts are seen as weakening to a currency, the chain of events is expected to result in higher oil prices.
But that's not the only reason Big Oil stocks are likely to move higher. A Fed rate cut generally stimulates gains on the stock market, since it lowers borrowing costs for companies, allowing for larger profits. So this means that Big Oil stocks like Exxon (XOM), ConocoPhillips (COP) and Chevron (CVX) are expected to gain along with other companies. In fact, they are already up this morning with the mere anticipation of this afternoon's Fed rate cut.
The current climate is one that should be helpful to Big Oil stocks, and should see them enjoying some solid gains, thanks to support from both oil prices and the stock market.
Disclosure: I do not own XOM, COP or CVX.