Oil investing: 2007 a tough act to follow

It was a banner year for energy – the sector was up 30% and crude jumped 60%. But don’t count on a repeat performance in ‘08.

NEW YORK (CNNMoney.com) — It’s been a phenomenal time to invest in oil, but analysts say the huge gains of the last year are most likely a thing of the past.

2007 was truly a banner year for the industry. The big integrated oil companies – ones that produce and refine crude – saw stock gains in the 30 percent range. Crude itself rose nearly 60 percent. The biggest winners were the oil production companies, some of which saw their stock prices double. Overall, the AMEX oil and gas index rose about 30 percent in ‘07, trouncing the near-stagnant S&P 500.


But most analysts say 2008 is unlikely to mimic the staggering returns of the last year. And on the heels of such a runup, some say the sector is simply overvalued.

Oil company stocks tend to rise and fall with the price of crude, so any prediction on stock prices needs to start with a look at the underlying commodity.

CNN