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The market will get inventory numbers tomorrow for crude, but Saudi officials are saying that crude has hit a low and prices are safe around these levels. We are seeing a bounce this morning in the price of crude, attributable to tension in the Middle East. If one is of the mind that it is inevitable that Israel will attack Iran, then the price of oil and the price of oil stocks offer an attractive entry point here. We are buyers of oil companies due to long-term fundamentals at this point and continue to advise readers to buy those resource companies which are increasing production through exploration and development.

Oil & Natural Gas

Kodiak Oil & Gas (KOG) saw shares test the $9.10/share level yesterday before rallying to close at $9.26/share for a minimal loss. Volume was relatively light with only 3.5 million shares traded yesterday as this one has calmed down. If the oil price has bottomed here, as the Saudis seemed to indicate in a piece we read this morning, then Kodiak will be a winner, if the fall has not ceased then we can expect to test the $9/share level and possibly lower. We would defer to the Saudis here and join the group that says we have bottomed here and that prices are headed higher. We underestimated the downside for prices by a few dollars per barrel, but still remain bullish.

Refiners

The refiners have been one of the top performing sectors this year as the industry is undergoing some consolidation and what we will call 'purification'. Many diversified oil companies have spun off their refining segments and the individual refiners are buying assets on the cheap that others are selling. That was the case with Marathon Petroleum Corporation (MPC) which saw shares power higher by $3.05 (5.56%) on volume of 9.3 million shares as the stock closed at $57.92/share on the news that they purchased BP's Texas City for up to $2.5 billion. The company closed off of its highs, but did hit an intraday high which set a new 52-week high.

Iron Ore

Investors saw shares in Vale (VALE) rise $0.50 (2.82%) to $18.21/share on strong volume of 26.4 million shares as iron ore prices are seen rising from these levels. The company has some of the lowest cost production in the world and when prices rise more of each dollar flows to the bottom line. This is one which we think is a trade when shares fall below the $18/share level and that has worked for some time now. With current prices the stock should do fine, but if the iron ore price declines further we would have to revisit this play and figure out if the valuation has gotten ahead of itself.

Cliffs Natural Resources (CLF) also saw its shares rise as news about India hit. Shares closed at $40.58/share after rising $2.22 (5.79%) on volume of 8.6 million shares. This stock is the perfect leveraged play for those trying to play a rebound in commodities and China as it has exposure to China via its iron ore and coal production and should see a big bounce once commodity prices begin to firm up again. It is not our favorite play, but for trading purposes it would serve one well.

Coal

Shares in coal names showed some strength yesterday and Alpha Natural Resources (ANR) was one of the leaders early on. Alpha Natural shares finished at $6.78 after rising $0.20 (3.04%) on volume of 14.5 million shares. The company is bouncing off of one month lows and is trading around a level which has provided a springboard for shares in recent months. We are not bullish here just yet, but recognize that if one believes Romney's running mate will have a good debate and/or we get some good news out of the coal sector then share prices can move higher in the short-term.

Source: 5 Commodity Stocks Moving On News