How to Play the Energy Sector Now

Middle East politics may have contributed to the recent drop in oil prices, but the long-term trend is still up.

Look no further than the pump prices at your neighborhood filling station for evidence of why energy stocks seem to be fizzling. But don't cut back on your energy holdings. In fact, this is a good time to add energy stocks, even if the short-term direction of crude is a muddle. Odds are that prices -- for both the commodity and the stocks -- are headed higher over the long haul.

Crude's performance has been like a roller coaster. Oil hit $77 a barrel in July, prompting some seers to declare that $100 was imminent. Instead, crude plunged to $50. Then, as sentiment grew more bearish, oil reversed course and jumped 20% before settling at $60 in mid February.

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Bob Frick
Senior Editor, Kiplinger's Personal Finance