Investing.com -- The dip in oil prices is a buying opportunity to pile up on commodities and energy stocks, Wells Fargo said in Monday note.
"We believe investors should use the recent weakness in oil prices to add exposure to Commodities and the Energy equity sector, both currently rated favorable in our guidance," Wells Fago said, expecting a rebound in oil prices.
Crude oil has fallen 16% from its recent highs, but now has breached oversold levels, Wells Fago adds, and may find support in within an uptrend in the "high $60s or low $70s."
The demand picture for oil will likely be supported by economic growth as the U.S. economy is likely to avoid a hard landing, Wells Fargo estimates, while "international growth is starting to recover and should help soften any deterioration in oil demand."
On the supply side, meanwhile, worries about OPEC phasing out production cuts later this year have been drag on sentiment, Wells Fargo believes that "it is some months away gives additional time for economies outside the U.S. to continue improving."