Back to top

Real Time Insight

While broad stock markets are at or near all-time highs, oil is still well below its peak price. The commodity is actually still below $100/bbl. and it has lost almost 20%-- when looking at (USO - ETF report)—over the past one year period.

This is pretty surprising as the more robust economy usually would signal modestly higher oil prices are not far behind. This is especially true given the broad positive data which has stretched across not only consumer figures, but employment and manufacturing data releases as well.  

What’s keeping it down?

Part of the trouble for oil is the strong dollar that we have been seeing lately. The greenback has been quite firm in recent trading, and this usually acts as a barrier against higher crude oil prices.

Additionally, a bigger supply of crude is also helping to keep a lid on oil prices as more is being discovered all the time in the Northern U.S. and Central Canada. It also hasn’t hurt that Europe has been shaky, and that some emerging markets are seeing less aggressive growth rates.

Still, one has to imagine that this trend cannot go on forever and that higher oil prices could be ahead if the economy continues to surge. After all, crude oil and stocks tend to move in lockstep—although oil does often exhibit greater volatility.

Consider the three month chart of USO, (UUP - ETF report) and (SPY - ETF report) below:

For the most part, oil and broad stocks have been moving together, but something has clearly happened in the past few weeks. Yes, we have seen additional dollar strength—largely due to weakness in yen, pounds, and euros—but something else is definitely at play.

Perhaps this is just some additional rotation out of commodities, at least until the next leg of the equity rally gets underway…

But what about you? 

What do you think happened to oil and where is it going next?

  1. $125/bbl.- higher prices are coming with the summer driving season
  2. $75/bbl.- lower prices are ahead as the dollar continues to strengthen
  3. $100/bbl.- flat trading is ahead for oil, I don’t see how it breaks out one way or another.

Let us know in the comments section below!

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Just Released: 5 Stocks to Double

Today, you are invited to download a free Special Report from Zacks Investment Research. It reveals five moves that could gain +100% and more in the next 12 months:

One is a "boring" business delivering blistering growth. Another is a red-hot oil and gas producer set to surge on a drilling breakthrough. Still another, an online payment provider, ignited a 53% sales explosion during the past year.

Close This Panel X

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%