The moment markets anticipated a severe shortage in energy and rising prices, oil prices slumped.
Within just a day after peaking, Exxon Mobil (XOM) broke through major moving average support levels.
Selling momentum could continue to send XOM stock to the 200-day moving average. Last week,
ConocoPhillips (COP) traded at close to that level.
Along with COP and XOM stock, Chevron (CVX) is a good holding for energy investors. The market is
pricing too aggressively the risk of a recession ahead.
The Federal Reserve raised interest rates by 75 bps. The magnitude is severe enough that certain parts
of the economy will slow. For example, housing demand will plunge on unaffordable mortgage rates.
But energy demand will not slow. The economy is still overheated. The excess money in the market has
yet to exit the system.
Investors may bet that the upcoming recession will not happen as soon as the markets believe. Instead,
a mild recession may not happen until early 2023.
As OPEC+ continues to limit output, the price of oil will stay in the $105 - $120 range. In the summer
when driving volumes rise, prices could break out to the $110 - $130 range. To profit from the higher
prices, consider COP, XOM, and CVX stock.
