I think the attorney general's comments with regard to possible criminal charges against BP really undid oil stocks late in the session. Its peripheral news events that are driving markets right now, not so much fundamentals unfortunatly.
Not only that, it's structural. Smart money is leaving the trade entirely. My guess is that it's like the late 1970's - early 80's. Commodities inflated relative to the economy, but the industry itself suffered low profits.
You made a bad call, dude. Make money on the other side of the trade. Everyone sharp is.
XLE up over 4% today on fairly strong volume. If we are in for a global depression shorting oil will probably work out really well. I am not expecting a depression though. I believe demand for oil will most likely grow modestly in the global market place over the next 6-12 months. I think a somewhat weaker dollar is likely to materialize too. There are smart people short oil, there are smart people long oil too. Paulson is long oil. The fundamentals for oil are too powerful. I prefer the long side of the oil trade. I'm bullish on Nat Gas too.