Oil prices had us nervous earlier this month, with futures racing into the triple digits. Crude has since cooled, now trading right around the $100 mark and giving way to a stronger US dollar. A great majority of dollar shorts have reversed their positions, but there’s no time frame on how long the market will stick with the safe haven currency.
European energy giants like Eni SpA and Total are fighting a two-headed dilemma of unstable oil prices and a euro-zone debt crisis. While a reversal in the former would surely overpower the woes of the latter, no European-based firm is fully protected from the growing financial concerns in Greece, Portugal, Italy and Spain.
With the driving months approaching in the northern hemisphere, firms like Encana look to benefit from stronger oil prices fueled by seasonal demand. Even South Africa’s Sasol can get in on the gains as the foreign producer serves a number of Northern Hemisphere markets.
Goldman Sachs’ bullish forecasts on the oil sector bodes well for energy longs heading into the summer months. Commodities thrive under strong global growth; any further economic gains made in emerging markets like China and Brazil will play a part in rising commodities like crude oil.