Monday, August 21, 2006

Oil Prices Up; Covering Most Shorts

Oil prices (and oil stock prices) are up over the weekend, partially reflecting geopolitical factors. It may not get down to the $65 per barrel area -- at least not before bouncing up to $80 or so. The uncertainty means it's probably not a good idea to be selling, or remaining short, on oil or oil stocks. You don't want to be in a trade like this unless you have an "edge," and it appears the edge has dissipated.

It turned out that during this period, shorting oil itself (such as the oil exchange-traded fund, USO) was much better than shorting the oil stocks (such as XLE).


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