When will oil prices correction mean that Big Oil stocks will head down?
Even though the AMEX oil index (XOI) has made gains of around 6 percent over the last month, it is down today. And Big Oil stocks are falling as well. With prices significantly above $80 a barrel, it seems as though oil prices are getting too high to be sustainable. And that means that Big Oil stocks could drop. CNN Money reports on the latest in Big Oil stocks:
'Nobody in his right mind thinks this oil price is sustainable or justified by market fundamentals,' said Fadel Gheit, a senior energy analyst at Oppenheimer. 'The higher prices go, the greater the risk for downside potential.'
The other problem for Big Oil stocks like Exxon (XOM), Chevron (CVX), BP (BP), ConocoPhillips (COP) and others is that if oil prices do come down other sectors will start to look more interesting. Technology has been undervalued since the tech bubble burst. Combine technology with a vacillating (but increasing) interest in alternative energy, and there could be viable rivals for investment dollars that used to go to Big Oil.
Of course, if you bought Big Oil stocks over the past few months, you have probably been reaping the benefits. But the tricky part of stock investing, apart from knowing when to buy, is knowing when to sell.
Disclosure: I do not own any Big Oil stocks.