Since bottoming at the end of 2008, oil (the commodity) has outperformed oil stocks significantly. The chart below shows the ratio between the S&P 500 Oil & Gas index and the price of oil. When the line is rising, oil stocks are outperforming, and when the line is falling, oil is outperforming oil stocks. When oil tanked in late 2008, the ratio got out of whack and soared to its highest level since 2001. Since its multi-year peak, the ratio has declined just as fast as it rose. While oil stocks have been doing okay, the price of oil per barrel has increased from the low $30s to the $60s. The current ratio is at the low end of the range it has been in since the start of the decade, but as we saw last year, it can go quite a bit lower.
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Jessica
jessica@ 4xindia.com
Posted by: Forex India | August 08, 2009 at 07:04 AM