Rising Oil Prices: A Safe-Haven Play?

Oil prices have reached their highest levels in three weeks, increasing by more than 2% on Tuesday. The price increase came on the heels of mixed global economic news.

The good news: China and the US show improving signs of positive economic activity. In America, a report on increasing factory orders for the month of May cheered up investors.

Meanwhile, China saw rapid growth in its services industries, which also improved employment figures. Typically, as businesses expand, the demand for fuel rises in tandem because of increasing fuel consumption (i.e. a successful retailer will require more shipments of goods, which increase the need for fuel).

“As long as we can see the economy growing, we are going to see more strength in oil…Oil may rise to $100 this month,” Carl Larry of Blue Ocean Brokerage LLC told Bloomberg.

The bad news: Moody’s, a credit rating agency, dropped Portugal’s credit rating to Ba2 on Monday. This marks Portuguese government bonds as “junk bonds.”

This is likely driving already-harried investors away from stocks and bonds and towards commodities, which are tied-up in the European debt crisis.

“We may be seeing some running to commodities as a safe haven. When in doubt about all the currencies, move into commodities. And the sector was a little oversold coming out of the holiday,” Phil Flynn of PFGBest Research told Reuters.

To help you formulate an investing strategy based on high oil prices, here is a list of five large oil stocks that have improved the most over the past month. Do you think oil prices will continue to rise in the future and lift oil company revenues?

List sorted by performance over the past month.

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1. PetroChina Co. Ltd. (PTR): Market cap of $269.17 billion. Share prices have increased by 5.04% over the past month.

2. ConocoPhillips (COP): Market cap of $107.21 billion. Share prices have increased by 4.78% over the past month.

3. Chevron Corp. (CVX): Market cap of $211.32 billion. Share prices have increased by 4.08% over the past month.

4. Sasol Ltd. (SSL): Market cap of $34.54 billion. Share prices have increased by 3.78% over the past month.

5. Total SA (TOT): Market cap of $134.93 billion. Share prices have increased by 2.47% over the past month.

(List compiled by Andrew Dominguez)

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