Boston, MA 08/20/2014 (wallstreetpr) – United Continental Holdings Inc (NYSE:UAL) and the other airline companies including Alaska Air Group, Inc. (NYSE:ALK), Republic Airways Holdings Inc. (NASDAQ:RJET) and SkyWest, Inc. (NASDAQ:SKYW) are posting gains from last some days on lower fuel prices. The oil prices continue to drop, and it is a significant factor contributing in the gains of the airline stocks. Price of oil has dropped in eight out of the last nine weeks. Fuel forms a big part of the airlines’ cost.
The oil prices
Airlines companies are benefitting from the oil prices as they at the lowest levels since April. There were fears of supply disruptions in the industry. As the news flow from Iraq started coming positive, it eliminated the risk premium hovering on the oil prices in months of May and June. Oil futures are showing a drop since Monday as the investors ignore the geopolitical concerns related to the unrest and violence in Ukraine and Iraq. Brent Oil Crude prices were trading close to fourteen month’s lows on Tuesday. The poor demand for oil and the higher supplies are affecting the prices of oil in this week. Geopolitical risks also look to subside in this week.
The view
Most of the big players and hedge funds are reducing their bets on Brent crude oil prices. The data coming from the Intercontinental Exchange reflects that there is ample supply of oil despite the tensions in Libya and Iraq. Oil will continue to remain under pressure due to a combination of various factors including lack of supply outages, plentiful supply and poor refinery demand. The change of perspective trades of financial investors is adding to the pressure on oils. Analysts expect the crude prices to find support at the current levels and if it happens investors have to assess their positions in United Continental Holdings Inc (NYSE:UAL) and other airline stocks.
