The price of oil just hit its highest point since July 2015. That’s really helping the one sector of the oil patch that we should be watching now: oil services companies.
The VanEck Vectors Oil Services ETF (NYSE: OIH) holds a group of oil service stocks in a basket. Its shares hit bottom at $21.76 per share in mid-August. As you can see from the chart below, its shares are steadily climbing in value:
As the price of oil rises, so will the volume of drilling and production. That will breathe life into a sector that the market left for dead.
The low that the sector hit in August was the third-lowest value the fund hit since 2004. The lowest value came during the financial crisis, when shares of OIH fell near $19 per share in December 2008.
As you can see, the recent low was within $3 of that period. That is critical because in December 2008, fear paralyzed investors. No one wanted to buy stocks. Everyone sold in a panic. Seeing OIH shares come within 15% of that low price earlier this year was astounding.
It told me that investors didn’t believe oil prices would recover any time soon …and that’s when I started telling you to get ready to buy.
You see, nothing makes me happier than seeing investors quit. When things get so bad that they can’t get any worse … they must get better.
That’s what’s happening in the oil patch right now. Things are getting better. So, put some money to work there soon if you haven’t already.
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