Energy Stocks Are Hot. The Fourth Quarter Will be Trickier.

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Demand for oil could drop in the coming months as motorists and air travelers pull back on spending. Sizing up the gap between oil prices and stocks.

With oil prices nearing $100 a barrel, energy stocks are finishing up an exceptionally strong third quarter. Exxon Mobil hit a record high on Wednesday, and energy is the only sector of the S&P 500 trading in positive territory over the past month.

There’s also a disconnect between oil stocks and the commodity, and that points to underlying problems. Brent crude futures, the international benchmark, were trading around $96 on Thursday, up 27% since the end of June, while the SPDR S&P Oil & Gas Exploration & Production ETF is up 17% in the same period.

Oil prices right now are being lifted by Russia and Saudi Arabia, which have announced they will cut production through the end of the year to keep prices high. Both countries could continue to keep their production low next year, but there’s also a chance they’ll start producing more, thereby causing downward pressure on prices.

 

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