An article from Jim Jubak with much valuable insight on the seasonality of the oil sector and current dynamics. It's well worth reading in it's entirety.
On a sidenote, throw APC into his list of stocks at the end, and I think you have a reasonable starting list of future potential takeout candidates.
MSN Money: Hard winter for the oil sector.
If it's February, the price of crude oil must be tanking -- and taking down oil stocks with it. Over the last 26 years, according to SeasonalCharts.com, on average crude oil prices have peaked in late January and plunged to a low at the end of February or the beginning of March. (There's another seasonal peak in October and another seasonal low in December.)
So it really shouldn't come as a surprise to investors that the AMEX Oil Index ($XOI.X) peaked on Jan. 31 and has been tumbling ever since. There's certainly no reason to panic and abandon this sector of the stock market. On average, a seasonal drop like this is followed by a strong seasonal rally that lasts into May.
But while the general seasonal pattern is familiar, I think this drop will be deeper than usual and the rally will arrive later than expected.
Stocks of oil producers, oil drillers and oil-service companies will bounce back. The energy rally isn't over by a long stretch. If you've held onto your energy stocks through the decline to date -- already 11.5% on Feb. 15 from the Jan. 31 high -- I think you should continue to hold. If you've been looking to buy on the dip, I think it's time to start building positions. But only if you have the patience to wait out a drop that could be over in two to three weeks or that might stretch well into the second quarter of 2006.