From Fortune via CNN Money:
...If you took our advice then, we'd strongly advise you to take some profits now. As much as we still like the business prospects of the companies we recommended, their stock prices do track oil prices, and we think that, while oil may spike over $100, the price is headed anywhere from 20% to 40% lower.
No, we're not suggesting investors unload all long-term oil holdings and trigger hefty capital gains taxes in the process. We just think this is a good exit point for active investors with short time horizons. (Among the stocks we picked in May, the one we would hold on to is Valero -- more on that in a minute.)
We're not alone in our concern that oil is poised for a correction.
Goldman Sachs -- which arguably has more influence over oil prices these days than any oil company -- put out a mildly bearish report on oil on Oct. 29, and oil fell $3 within hours.
Charles Ober, manager of the T. Rowe Price New Era energy fund, tells Fortune his fund's cash position is now 6%, up from the 2% to 3% that he normally keeps. "That doesn't mean I believe these stocks are overpriced," says Ober, who has large holdings in Cameron, Diamond Offshore, and Schlumberger. "It's just that oil stocks tend to go down when oil prices fall, and barring some sort of event with Iran, I think oil prices are coming down."...And the overreaction this time around is especially egregious, says Oppenheimer & Co. oil industry analyst Fadel Gheit. "It's a bubble," he says bluntly.
Gheit thinks the appropriate price for oil is $65 a barrel. Were a slowing U.S. economy to slip into recession, "oil would definitely fall below $50," he adds....MORE