Oil Markets Point to Global Energy-Stock Rebound: Chart of the Day
Oil markets are sending signals that it’s time for energy companies to start beating stock-market benchmarks, according to Pierre Lapointe, a strategist at Brockhouse & Cooper Inc.
The MSCI World Energy Index, consisting of oil and gas producers based in developed markets, gained just 0.4 percent this year through yesterday. The MSCI World Index increased 5.6 percent during the same period.
The CHART OF THE DAY shows two gauges that point to a reversal in the industry group’s performance, according to a report today. The white line depicts oil-futures trading by speculators, based on data compiled by the Commodity Futures Trading Commission. The red line displays an oil-volatility index from the Chicago Board Options Exchange.
Speculators’ holdings of crude-oil contracts exceeded the number of short positions by 125,271 contracts in the week ended Oct. 26, the CFTC’s data shows. The number jumped about 12-fold in the last seven weeks. Short positions result from the sale of futures to profit from lower prices.
The CBOE Crude Oil Volatility Index, which is similar to the VIX Index for U.S. stocks, dropped to 33.33 yesterday from this year’s peak of 47.15 on June 4. Lower readings for the so- called fear gauge tend to coincide with higher prices for oil, Lapointe and economist Alex Bellefleur wrote in the report.
“Taken together, these two indicators suggest that market sentiment towards oil -- and, by extension, the energy sector -- is changing” for the better, they said. The analysts recommended that investors favor energy shares as well as countries where oil and gas producers account for much of the stock market, including Brazil, Canada, Norway and Russia.
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To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net
To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net
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