In the latest episode of Markets in Motion, Bruce Campbell turns his attention to the energy sector as geopolitical tensions drive a sharp move in oil prices.
Bruce explains that crude oil has surged to around US$120 per barrel amid escalating tensions between the United States and Iran — a dramatic shift from just weeks earlier when low fuel prices were being highlighted in political discussions. The move has already begun pushing gasoline prices higher across the United States.
From a technical perspective, Bruce highlights that oil has moved four standard deviations above its 50-week moving average — an extremely rare event. Historically, when oil reaches this level of deviation, the commodity price itself tends to cool off over the following two to five months as markets stabilise.
However, the more interesting story may be what happens next for energy stocks. Looking back at past instances when oil has experienced similar moves, Bruce notes that energy equities have historically continued to perform well.
While short-term performance over the first month can be mixed, oil stocks have risen over three-month, six-month, and one-year periods in every comparable historical case. With energy stocks already trending higher before the recent geopolitical developments, the current spike in oil prices could act as an additional catalyst for the sector.
For investors, Bruce suggests keeping a close watch on the energy sector — whether it’s identifying potential opportunities or monitoring positions already held in a portfolio.
Watch the full video above, and check back for next week’s episode.
Join the discussion: Check out Stockhouse’s stock forums and message boards.
Stockhouse does not provide investment advice or recommendations. All investment decisions should be made based on your own research and consultation with a registered investment professional. The issuer is solely responsible for the accuracy of the information contained herein. For full disclaimer information, please click here.