Frank Holmes: Good Time Of The Year For The Energy Sector (SJT, XLE, USO, CVX, COP)

Despite continued high inventories, oil prices continued to climb and exceeded $82 intraday yesterday. The recent rise in oil prices has been attributed to tension with Iran, the global economy and momentum in the stock market. According to the CEO and CIO of US Global Investors (NASDAQ: GROW), Frank Holmes, every commodity has its own "DNA of volatility," and that oil usually bottoms between December and February and drives up the price until September.

According to Holmes, there is a high possibility of oil prices touching $100 during the upturn. While predicting that oil prices would touch $90 in the near term, Holmes added that the global economy had the ability to handle higher crude prices, barring stray incidents when prices created an high of $147 per barrel (2007).

Holmes said that while investors can trade in commodities in the short term, it is better to focus on MLPs paying "fat, juicy dividends for longer term." He also noted that major oil producers like Chevron (NYSE: CVX) and ConocoPhillips (NYSE: COP) pay better dividends than that paid by bonds or money market funds, apart from offering capital appreciation opportunity.

While Energy Select Sector SPDR (NYSE: XLE) moved down 0.28%, San Juan Basin Royalty Trust (NYSE: SJT) rose 0.07%. Meanwhile, United States Oil Fund (NYSE: USO) lost 0.90% to $39.43 since this morning.

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