"Its an ill wind that doesn't blow SOMEBODY some good..."
Oil prices are back in the danger zone for the American economy, only this time an economic contraction is not as likely (notice I did not say "won't" or "will not"... anything is possible) to collapse Oil prices. I say this because I believe that the U.S. is no longer the "Axe" in the price of Oil.
Nat Gas is finally finding the handle as it has become apparent to the industry and the market that the players have been overfunded to the point of soiling their own nests.... this is a great lesson in understanding the commodity cycle... over investment leads to overproduction leads to price declines leads to underinvestment leads to underproduction leads to rising prices leads to over investment...
Fron month crude Oil is $82.11 as we speak, but delivery this spring (June) is over $85. This is murder on the U.S. economy but music to the ears of energy investors.
I like equities better than the commodity at the moment because of the fairly steep contango. I made a killing in the commodity a few years back, but I made my bet at a time of steep backwardation (please goolge "contango" and "backwardation" for the sake of brevity)... and the market seems to be onto us in a case of "fool me once, shame on you... fool me twice, shame on me..."
My biggest energy equity position is Exxon... earnings just out were up 55% and that's with the price of Nat Gas in the crapper... If, and its a big "IF", Nat Gas can catch a bid Exxon could be a triple digit name. Not a bad return for taking a AAA+ risk, me thinks. Keep in mind that I use a multitude of hedges, i.e. covered calls, shorts, paired trades...
Gotta keep your eye on the ball, though. This is not a recommendation, only my thoughts and observations and I reserve the right to change my mind on a freakin' dime.