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Volatility in crude oil prices is good for U.S. refinery shares

Posted August 4, 2008

J Christoph Amberger on TFN 60-Second Buzz Recent volatility in crude oil prices has exposed the dangers for investors with overweight commodities bubble portfolios. But lower prices are good news for U.S. refiners. We have our eye on one particular company. Click here to view…

By J. Christoph Amberger

Baltimore — (TFN): According to oilmen, goldbugs, and rockhounds, the sky’s the limit for gold and oil. But after approaching $150 in July, up 50 percent from January, crude oil prices have dropped 18 percent as I’m filming this. Modest increases in the dollar’s comparative valuation illustrate just how precarious the appeal of commodities as a short-term hedge against inflation truly is.

Oil prices are breaking record highs. So why is this Federal Reserve Chairman betting $509,000 of his own money on falling prices?

If the oil bubble deflates even temporarily, watch for money flows to rotate out of the oil sector. Where will it go? Since speculative swings are no longer an issue and the U.S. taxpayer has been volunteered to pick up the tab for the foreclosure debacle, chances are it could go into beaten-down bank and investment firm stocks — which provides an enormous if theoretic upside.

Overall, oil should continue to be in high demand. Oil companies still are quite profitable even at $100 per barrel and below. In the short-term, oil refiners in particular should profit handsomely from a margin-expanding drop in crude.

For our premier Hot Stock Confidential pick in this sector, follow the link we provide with this video alert… or check out our new website at HotStockConfidential.com.

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Posted by J. Christoph Amberger · Filed Under Featured Video, Oil and Energy, Podcast, Videos 

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