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How to Profit From the Coming Oil Plunge

Oil prices have been soaring, but one analyst sees prices sliding soon, with some important implications for investors in energy stocks.

FBR's Eitan Bernstein says U.S. petroleum supplies are quite adequate, and it's important to focus on fundamentals. He told CNBC that growth expectations are too high, and he predicts a sharp drop during the first half of 2008.

So how should investors play the oil sector in 2008?

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Price
 
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ICTXX
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OXY
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Bernstein likes Occidental Petroleum and Hess.

"Oxy and Hess are both significantly leveraged to high crude oil prices," he told CNBC. "In the second quarter, when crude oil prices pull back, the stocks will really pull back, and that should be a great time to get into these names."

Occidental Petroleum and Hess are investment-banking clients of FBR, and the firm may from time to time have a long or short position in both companies.

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