Oil prices are up almost 140 percent from the 52-week low and up 82 percent year-to-date. Oppenheimer & Co.’s Fadel Gheit, managing director of oil and gas research, and Scott Burk, senior analyst of oil services and ocean shipping, told CNBC where they see investment opportunity. (See their stock picks, below.)
Oil is "absolutely a place to invest,” Gheit told CNBC. “But you really have to take the whole ride of the volatility. I do believe that oil prices will remain inflated for the next few months.”
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Gheit said the price of crude will remain more connected to factors other than supply and demand: the US dollar, global tension and speculation are all factors.
“In my view, [the move in oil] is pure speculation,” he said.
Energy/Fuel Prices Charts:
- Crude Oil Futures
“I still believe that demand does not support [the current price]…But the CFTC* is not doing anything about it, the U.S. government is not doing anything about it. OPEC is happy about $50 oil 6 months ago and now they’re happy about $80 oil. We already have $80 oil and we can get even $100 oil.”
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Gheit said investors can make money with energy stocks that have “momentum.”
“Natural gas prices have been depressed for a very long time, they’re likely to rebound... So we are still bullish on natural gas stocks,” he said.
“But we think oil will be a place to invest for the long run. Oil is not going to go out of fashion anytime soon, but the investor has to be careful when the stock gets overvalued. They have to pull back a little bit.”
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In the meantime, Burk underscored that if the U.S. dollar continues to weaken, it will help oil prices.
“Specifically for the offshore drillers,” he said. “There’s a correlation of 93 percent between oil prices and stocks.”
He added that oil prices should stabilize in the $70 to $80 range.
* Commodity Futures Trading Commission
Burk does not own shares of ATW, DO, PDE
Gheit owns shares of DVN, but does not own shares of APC, CHK.