Newman: The oil shock that hasn't happened

Published On Sep 9, 2024, 3:35 PM

In this article, it discusses the recent stability of oil prices despite ongoing tensions in the Middle East, particularly between Israel and Iran. Early August saw traders worried about a possible Iranian attack, which sent oil prices up to about $80 per barrel, but due to a lack of timely retaliatory actions from Iran and the US's military presence as a deterrent, prices have since fallen to around $68. Analysts suggest that oil prices could further decline with predictions of Brent crude dropping to $60 by next year. The article highlights that local gas prices are also reducing, providing relief to consumers, and predicts that prices could approach $3 per gallon in several states by the end of September, benefiting the Biden administration's political circumstances ahead of elections.

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Stock Forecasts

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Positive

With the current stabilization of oil prices and potential decline, investors might consider ETF positions that could benefit from lower oil prices, such as those focused on consumer staples or travel-related sectors that may see increased demand due to lower gasoline costs.

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Negative

However, oil and energy stocks might face downward pressure if oil prices continue to decrease. Therefore, short positions in high-publicity energy companies could hedge against decreasing margins and profitability forecasted by analysts.

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