With Memorial Day rapidly approaching it almost seems appropriate that the energy trade has landed squarely in the spotlight with the Street desperate for any signs of what’s to come next.
Oil prices closed sharply higher on Wednesday, however fist fights practically break out on Wall Street over whether the next leg in oil is higher or lower.
In fact, the schism between oil bears and bulls has now grown to levels unseen since oil prices peaked in 2008, according to Reuters monthly poll.
While bears cite weak demand and ebbing geopolitical risk premiums as reasons for oil to plunge to $75 per barrel, bulls see it soaring to $140 due to supply shortages and the limited ability of OPEC to cushion any new disruption.
It seems, both Goldman Sachs and Morgan Stanley have sided with the bulls. Both revised their price targets on crude, sending estimates sharply higher.
However, an AAA nationwide survey, suggests the bears have a strong case. AAA found that four of 10 travelers said gas prices have revised their Memorial Day travel plans, making trips shorter or if they must drive scrimping on hotels, meals and entertainment to make up for gas gouging, the survey found.
“Certainly there’s a strong correlation between propensity to travel and hotel occupancy,” says Patrick Scholes, FBR leisure analyst in a live interview on CNBC’s Fast Money. But with $4 gas he also says he’s not seeing a noticeable pullback on travel.
What should you make of it? How should you position now?