What is going on in Oil?
My first pick this year was an outperform sector call on oil exploration and oil services. Oil was just crossing $100 at that point. I argued that there was nothing magical about this "milestone", and that I foresaw that oil would continue to go up long-term. I made about a dozen and a half outperform picks based on rising oil, all of them oil explorers and oil services. Today, I am closing most of those picks (all in the green, average score about 25).
It is not that I am changing my long-term view on where oil prices are going. The fundamentals have not changed. However, I am noticing something that puzzles me: even though oil prices have been leaping up over the past several days, the explorers and service companies are not going up. On top of that, refiners are going up (despite the increasing oil prices). So, I don't know what is going on here. The only thing I can think of is that short-term oil is now so much overpriced that it is due for a correction. That would explain why explorers and services are not going up, and refiners are going up, while oil is jumping to all-time highs. Didn't we see something similar when gold jumped above $1,000 not so long ago, while many gold miners failed to keep up?
I'd like to open up the forum here to find out what is going on. Provide your opion!