Is Now the Time to Buy Oil Stocks?
Oil prices have been volatile in recent days because investors are worried that the omicron variant of the coronavirus will lead to widespread economic shutdowns. That could very well happen, but the big picture for energy stocks won't materially change even if it does. Here's why now could still be a good time to buy oil stocks and why you need to be cautious about which ones you choose.
Oil is a cyclical industry, with demand tending to ebb and flow along with economic activity. And since oil is basically a commodity, there's little energy companies can do to differentiate their products. Thus, the financial results in the industry tend to rise and fall along with the highly variable price of oil. It's just how the sector works. Notably, when demand fell sharply because of the economic shutdowns used to slow the spread of the coronavirus in 2020, energy companies suffered and so did their stocks. Although demand has come back, the new omicron variant has investors worried about shutdowns again. And, thus, oil and energy stock price volatility is high.
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Source Fool.com
