Another way to profit from oil’s rebound (XES)

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June 5, 2009 9:40am NYSE:XES

oil3“Drill baby, drill” may have failed as a campaign slogan, but the mantra appears to be working for investors.

The S&P Oil & Gas Services ETF (XES) has jumped 57% over the last three months, outperforming the S&P 500 (SPX) by 25%. Service and drilling stocks, which were pounded last year as production companies made steep cuts, are riding the wave of near-$70 crude.


They’re also benefiting from reports of slowing declines in rig utilization — Baker Hughes (BHI) announced last week that the number of active rigs declined by just one, the smallest drop since last year.

When crude prices rise, pure play oil producers like Exxon (XOM) and Chevron (CVX) are typically the first in line for growing profits. But because their shares are so widely-held, their stocks can only move so far. “The problem with those names is that everyone owns them,” says Jerry Jordan, manager of the Jordan Opportunity Fund

Full Story: http://money.cnn.com/2009/06/05/pf/another_way_to_profit_oil_rebound.fortune/


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