Have Crude Oil Stocks Exhausted Their Run?

Floyd Norris, the primary fiscal correspondent of The New York Times, suggested inward his blog today that nosotros are looking at "The Beginning of the End for High Oil Prices". What is the dry reason of his optimism? He argued that crude oil stocks convey been lagging crude oil prices lately, together with so equity investors must believe that high crude oil prices are causing need devastation which volition eventually cut down crude oil prices together with crude oil companies earnings.

I beg to differ.

Look at the long-standing spread relation betwixt an crude oil stock ETF together with an crude oil commodity ETF, e.g. XLE vs USO, which I convey been commenting on together with tracking since October 2006. At the moment, this spread is inside 1.4 touchstone deviations of its historical value. See my tabular array here (subscription required). In other words, crude oil prices together with crude oil stock prices are at about their long-time historical average. I would hardly telephone telephone that suggestive of the outset of the end.