ETF Trends
ETF Trends

Welcome or not, the BP oil spill has put the spotlight on the oil industry. Although related exchange traded funds (ETFs) have not been hit too hard, a handful of stocks have, and as is always the case in a huge sell-off, investors should have a keen eye for undervalued assets.

According to Tony D’Altorio of Investment U, few people know that the oil exploration industry was in trouble even before the BP (NYSE: BP) oil spill. [BP Oil Spill Fallout.]

D’Altorio cites that back in 2008, drilling rig operation rates were nearly 85% in the Gulf of Mexico. By last summer, that number had dropped to 45%. In addition, the day rates for jackup rigs fell from $168,000 to merely $78,000.

Although the day rates recovered to around $115,000 and operation rates rose to near 63%, the BP oil spill blew up any signs of recovery. [Natural Gas ETFs Win in Oil Spill.]

However, D’Altorio thinks that the market may well have overreacted, providing a great opportunity for investors and other oil companies to scoop up dirt-cheap stocks.

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