I’ve been following and trading oil and oil stocks for more than 35 years, and I’ve never seen it quite like this, where oil stocks are so completely hated. It doesn’t matter if the stock market goes up or down, it seems that oil stocks inevitably drift lower.
Even if the underlying commodity – oil – shows some unexpected strength, as it has in recent weeks, oil stocks continue to drift away.
I’ve never seen such a disconnect – both from the stock indexes and the price of the oil barrel.
There are two ways of looking at this – both of which I will present to you before I make my case on what to do:
First, a likely reaction is to wonder whether we’ve reached some sort of “new normal”.
It’s a phrase I’ve heard dozens of times during the 35 years I’ve been tracking oil and oil stocks.
Particularly if you’ve had a career in the media, where hyperbole plays well to selling commercial time and your brand on TV, implying a ‘new normal’ can get you some serious interest.
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So, during 2010- 2014, there were a lot of analysts and talking heads talking about a new normal of oil prices that wouldn’t dip much below $100 a barrel. I’ll admit that I was one of these, believing that there was no way oil was ever going come out of the ground for much less, considering the ever increasing global demand picture.…