Is Big Oil Making Big Gains?

Today, German and French leaders pledged to devise a plan to recapitalize banks by the next Group of 20 summit on November 3, giving both European and US stock futures a boost.  The Dow (NYSE:DIA) opened more than 200 points higher, as the S&P 500 (NYSE:SPY) closed in on its largest gain in over a month.  With the euro showing signs of life, the US dollar (NYSE:UUP) declined and sent commodities (NYSE:RJI) across the board higher.

On Monday, crude oil (NYSE:USO) prices jumped to their highest point in two weeks.  It marks the fourth consecutive day of rising oil prices. On the New York Mercantile Exchange, November crude rose nearly 3% to settle at $85.41 per barrel. Crude is rising on “high hopes for an imminent Eurozone bailout,” Andrey Kryuchenkov, an analyst at VTB Capital said. “Policy makers in the EU have few options and no one wants 2008 all over again.”

Investing Insights: Oil ETFs: The Top 10 Exchange Traded Funds for Your Oil Investing List.

As the chart below shows, it has been a hit or miss for oil investors this year.

One of the best big oil plays year-to-date is Chevron (NYSE:CVX).  Shares have increased nearly 7% this year (not including dividends), which leads other big oil names such as Exxon Mobil (NYSE:XOM), ConocoPhillips (NYSE:COP), and BP (NYSE:BP).  In fact, since the Dow’s all-time high in 2007, Chevron has been the 5th best performing Dow component. Shares of BP have underperformed as investors still remain cautious after the company’s Deepwater Horizon oil spill fiasco.

Investor Insight: The Eurozone Lights a Fire Under Gold and Silver.

The decline in the US dollar has been significant enough to allow investors to overlook recent downgrades in oil companies.  Exxon Mobil and Chevron both received downgrades from JP Morgan (NYSE:JPM) last Thursday.  However, both stocks are up more than 2% since the downgrade.  Exxon Mobil and Chevron are two oil plays that we discuss trading strategies with for our premium members.  For investors seeking more detailed professional analysis on oil and other commodities (NYSE:RJI), we invite you to try our premium service free for 14 days.

More from The Cheat Sheet