Week in Review

by Dawn Pennington on December 11, 2015

Oil dropped to seven-year lows this week, spooking traders into selling. Today’s closing price of $35.62 per barrel (West Texas Intermediate crude) puts oil down 11% for the week.

Now, it would seem low oil prices would be good for the economy. In logical thinking, that is correct. But, in the investment world, it’s not even close.

The reality is, oil stocks are a big part of the S&P 500. So, when they drop, so does the index.

With the S&P 500 finishing down today (it fell 2%), it has not had two “up” days back-to-back for 27 days. That’s the longest streak since 1970. So, put that into perspective when you think about volatility.

Oil and the S&P 500 are trading in parity with each other, which is not necessarily a good thing. It means that no stocks are “safe” at the moment. But if the markets are as ready as everyone says they are for a Fed rate hike, maybe Santa will bless us with a rally a lot sooner than the final week of the month.

{ 1 comment… read it below or add one }

Ed Nichol May 6, 2016 at 8:50 am

So, back to oil. Who is going to lose when all of those $30 buy contracts start kicking in? I know my sister in Law kept her job in the pipeline industry with the $80 sell contracts but $30 buy? Few in USA can deliver at that price so will they stop production while the Middle East supplies USA? Another two years of doldrums in the USA? cheap oil but no jobs.

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