As Crude Jumps, A Little Rally In Oil Shares (XOM)(BP)

A good thing happens, but a bad thing happens. The current market works that way. All the arrows never point in the same direction.

As word of the government’s bank bailout spread, crude oil moved up to $108. It has risen 10% in a few short days. If the market believes that the economy will respond to the "stimulus" package, oil may continue to trend higher.

How are the bank bailout and oil related? They aren’t. It is a stretch to say that saving banks will do anything for the consumer or business credit markets any time in the next several months. Some economists question whether it will do anything at all.

Oil exploration and refinery stocks are benefiting from the move in oil, whether it is justified by market forces or not.

With the market down 1.5%, Exxon (XOM) and BP (BP) are moving up, taking back some of the ground they have lost in the last few months.

Oil’s move may not be rational, but if the bailout passes Congress crude will go higher.

Douglas A. McIntyre