OUTLOOK The improving economic scene, both here in the U.S. as well as worldwide, is the main driver of the current oil rally that has seen the commodity settling around the $80 per barrel level. But high levels of product inventories (particularly gasoline), along with still higher supplies, will limit any sustained crude gains, in our view. But way too many factors weigh on oil prices, from OPEC decisions and geostrategic tensions to the value of the U.S. dollar and seasonal variables, to definitively size up each one of them for their respective impact on prices.  In its latest release, the Energy Information Administration (EIA) reported a less-than-anticipated increase in crude stockpiles, which rose by 800,000 barrels for the week ending October 23. However, current crude oil stocks, at 339.9 million barrels, still remain 9% above the year-earlier level as well as above the upper limit ...

The emerging positive narrative of a favorable outlook for the U.S. economy has done wonders for the markets, particularly equities and commodities. The broad equity markets as well as most commodity groups are up smartly from their early-March lows.

Crude oil's gains have been even more impressive, given its heavy leverage to the health of the global economy. Our view is that oil should be able to hold onto its recent gains and consolidate around current levels, provided this favorable economic view remains in place.

While we have greater confidence in the staying power of the current oil rally, this does not mean that we will not see any short-term pullbacks. On the whole, we expect oil prices in 2010 to be higher than the 2009 levels, but remain significantly below the 2008 peak levels.

Crude oil's near-term fundamentals remain dismal, to say the least. Inventories in the U.S. are at multi-year highs

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The emerging positive narrative of a favorable outlook for the U.S. economy has done wonders for the markets, particularly equities and commodities. The broad equity markets as well as most commodity groups are up smartly from their early-March lows. Crude oil’s gains have been even more impressive, given its heavy leverage to the health of the global economy. Our view is that oil should be able to hold onto its recent gains and consolidate around current levels, provided this favorable economic view remains in place. While we have greater confidence in the staying power of the current oil rally, this does not mean that we will not see any short-term pullbacks. On the whole, we expect oil prices in 2010 to be higher than the 2009 levels, but remain significantly below the 2008 peak levels. Crude oil’s near-term fundamentals remain dismal, to say the least. Inventories ...

For Immediate Release

Chicago, IL - June 11, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Weatherford (WFT), Ensco (ESV), Exxon (XOM), Schlumberger (SLB) and Diamond Offshore (DO).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Wednesday's Analyst Blog:

Inventory Drop Supports Oil Rally

A bigger-than-expected drop in crude oil inventories and the seasonal uptick in gasoline demand is helping sustain the spectacular rally in crude oil prices that has pushed the commodity to a new high for the year.

While an improving economic outlook and favorable currency

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A bigger-than-expected drop in crude oil inventories and the seasonal uptick in gasoline demand is helping sustain the spectacular rally in crude oil prices that has pushed the commodity to a new high for the year.While an improving economic outlook and favorable currency moves account for the bulk of the commodity's gains, recent moves on the inventory front have also been helpful. Crude oil stockpiles, still at multi-year highs, have been steadily coming down over the last few weeks. Including today's report from the Energy Information Administration (EIA), crude oil inventories have dropped in four of the last five weeks.We continue to believe that there are good fundamental underpinnings for the ongoing oil rally. We continue to favor early-cycle leverage through oilfield service names, such as Weatherford (WFT) and Ensco (ESV). Our long-term favorites remain Exxon (XOM), Schlumberger (SLB) and Diamond ...

For Immediate Release

Chicago, IL - June 4, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Weatherford (WFT), Ensco (ESV), Exxon (XOM), Schlumberger (SLB) and Diamond Offshore (DO).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Wednesday's Analyst Blog:

Oil Takes Stock of Crude Realities

While the future may be better than the present, today's inventory report is a crude reminder not to lose sight of the existing oil glut.

We continue to believe that there are good fundamental underpinnings for the ongoing oil rally. Having said that,

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After back-to-back inventory drawdowns over the last three weeks that had slowly started to eat into oil's multi-year inventory overhang, we got an unexpected inventory build today. Oil's impressive recent gains -- the commodity has roughly doubled from its Feb '09 lows -- have been driven almost entirely by an improving economic outlook and favorable currency moves. But the inventory reports over the last few weeks have been helpful, nevertheless. Can today's bearish report break that momentum?The EIA reported a greater-than-expected 2.9 million barrels build in crude oil inventories. Current crude oil stocks are 19.3% above the year-earlier level and remain above the upper limit of the average for this time of the year, as is shown in the chart below from the EIA. The supply cover increased from the previous week to 25.2 days of supply, significantly above the year-earlier level of 20.1 days.The ...

The emerging positive narrative of a favorable outlook for the U.S. economy has done wonders for the markets, particularly equities and commodities. The broad equity markets as well as most commodity groups are up smartly from their early-March lows.Crude oil's gains have been even more impressive, given its heavy leverage to the health of the global economy. Our view is that oil should be able to hold onto its recent gains and consolidate around current levels, provided this favorable economic view remains in place.While we have greater confidence in the staying power of the current oil rally, this does not mean that we will not see any short-term pullbacks. On the whole, we expect oil prices in 2010 to be higher than the 2009 levels, but remain significantly below the 2008 peak levels.Crude oil's near-term fundamentals remain dismal, to say the least. Inventories ...

We highlight Weatherford International Ltd. (WFT), Ensco International, Inc. (ESV), Exxon Mobil Corp. (XOM), Schlumberger Ltd. (SLB) and Diamond Offshore Drilling, Inc. (DO).In its weekly status report today, the Energy Information Administration (EIA) reported a greater-than-expected drawdown in crude oil and gasoline inventories. Despite the weekly drawdown, crude oil inventory levels remain close to their highest level since 1990.The demand picture also remains very weak. Total refined products supplied over the last four-week period, a proxy for overall petroleum demand, was down 7.6% from the year-earlier period, with gasoline down 1.2%, distillates (includes diesel) down 12%, and jet fuel down 9%.The market has been looking beyond these weak near-term fundamentals, taking solace from the growing optimism about the economic landscape. Our view has been that oil should be able to hold on to its recent gains and consolidate around ...

Highlights include Exxon Mobil Corp. (XOM), Schlumberger, Ltd. (SLB), Transocean Ltd. (RIG), Nabors Industries Ltd. (NBR), Patterson-UTI Energy Inc. (PTEN), BJ Services Co. (BJS), XTO Energy Inc. (XTO) and Chesapeake Energy Corp. (CHK).Oil prices have moved up impressively in the recent past, up almost 18% in the last four weeks alone, and currently at the highest point in 2009 at close to $58 a barrel. The S&P 500 has gained around 11% in the same time frame, though its overall gain from the March lows is fairly impressive. The equity market rally reflects the growing optimistic narrative about the economic landscape, with sightings of 'green shoots' and favorable 'stress-test' outcomes. Today's favorable payroll numbers reinforce that outlook.But what accounts for the oil rally, how sustainable is it, and what are its investment implications going forward?There is ...