Energy Retreats Early And Here Is Why
This morning, spot oil and many of the leading energy stocks are pulling back. As you know, oil has been surging higher since mid-December 2011. Yesterday, oil spiked higher after a false report cited a fire in a Saudi Arabian oil field. While geopolitical events and weather can effect energy prices, it is usually the weaker U.S. Dollar that will cause energy and most other commodities to rise. Today, spot crude is declining lower by $1.38 to $107.36 a barrel. Please note the U.S. Dollar Index futures (DX- H2) are trading higher 0.64 cent to $79.48 per contract. Should the U.S. Dollar Index decline throughout the session one could expect oil and the energy stocks to catch a bid higher off of the morning lows.
Some leading stocks and ETF's that are coming under early selling pressure include United States Oil Fund (NYSEARCA:USO), United States Gasoline Fund (NYSEARCA:UGA), ConocoPhillips (NYSE:COP), and Exxon Mobil Corp (NYSE:XOM). These stocks should see intra-day bounce opportunities as the U.S. Dollar Index rarely holds up throughout the entire trading day.