The price of oil is soft in the short-term giving us an opportunity. I believe that oil will trend higher beginning this summer and has the potential to go much higher on geopolitical risk in the Middle East in coming years. An extreme oversold condition is being seen across the board and that indicated a reversal soon.
I am adding to the SPDR Oil & Gas Equipment and Services ETF (XES). As we’ve covered before, these companies are very levered to rising oil prices. While we might see a little more downside in oil prices, there is every reason to believe we are close to a rising price environment. I am looking for a price in the middle $16s on XES.
XES is about 6% of my holdings.