Tags: Analysts | Pricey | Oil | Good | Stocks

Analysts: Pricey Oil Can Be Good for Stocks

Tuesday, 08 Mar 2011 09:54 AM

Rising oil prices can boost stock prices by creating jobs and forcing demand for cheaper alternatives, analysts at Bank of America Merrill Lynch (BAML) say.

Less than 40 percent of U.S. energy consumption comes from oil, as cheaper natural gas and coal are bigger suppliers, the analysts say, according to The Wall Street Journal.

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High oil prices may boost stocks.
Furthermore, high oil prices are good for many U.S. companies that supply the oil industry, they lead to more job-creating drilling projects and lastly, more Americans are driving more fuel-efficient cars today than they were in 2008.

All that makes many equities good investment opportunites.

"BAML reiterates its S&P 500 first-half target of 1,275-1,400 and says its year-end target of 1,400 has 'upside risk,' meaning they could be too low in their current guesstimate," The Wall Street Journal reports.

The S&P 500 index is currently trading around 1,300.

The White House says it's considering tapping the Strategic Petroleum Reserve in an effort to ease the effects of high oil prices, yet it's going to take more than higher prices at the gasoline pump before such drilling begins.

White House Press Secretary Jay Carney says other factors, such as a "major disruption in the flow of oil," will have to be considered, according to Fox News.

"It's an option we are considering. But there are a number of factors that go into it, and it is not price-based alone," Carney says.

"I wouldn't look to a price threshold."

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Rising oil prices can boost stock prices by creating jobs and forcing demand for cheaper alternatives, analysts at Bank of America Merrill Lynch (BAML) say. Less than 40 percent of U.S. energy consumption comes from oil, as cheaper natural gas and coal are bigger...
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2011-54-08
Tuesday, 08 Mar 2011 09:54 AM
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