If oil prices recover in 2009, so will natural resources stocks

— -- Today's price of oil represents the wise and sober assessment of all available information by all market participants.

Ahahaahaha! Just kidding. In reality, the price of oil reflects the fear that the world economy, as we know it, will fall into a kind of fiscal coma, followed by alternating periods of decrepitude and collapse.

Should the world economy move up from recession to normality, however, it's a good bet that the price of oil will rise late next year — and that means, in turn, that energy stocks and natural resources funds will be the chief beneficiaries.

Natural resources funds have been pumping mud this year, falling an average 47.5%. Although the bear market is partly to blame, the collapse in oil prices is the main culprit, because resources funds invest primarily in energy stocks.

The price of a barrel of light, sweet Texas crude soared to $145.29 on July 3, up 51% from the start of 2008. Oil had soared more than 1,111% since 1998, when a barrel of oil cost about $12 — less than a case of beer.

But the oil gusher went dry. Oil for January delivery closed Thursday at $47.98 — up 10% for the day, but still 67% off its July highs. What happened?

Global financial collapse. Demand has plunged since July because of the economic slowdown. "Most driving is work-related," says Tom Kloza, chief oil analyst for the Oil Price Information Service. You don't drive as much when you're laid off.

Because the recession is global, people in India and China aren't driving as much, either. World economic growth could fall 2% or 3% in the coming year — which doesn't sound like much but is enormous. "It's like a 2- to 3-degree temperature drop for a human being," Kloza says.

Some experts are getting bullish on oil, however, not because demand is rising, but because it's not falling as fast as it was earlier in the year. "We might be seeing the worst on demand as we speak," says Timothy Parker, energy analyst at T. Rowe Price.

Predictably, energy stocks have been clobbered — too much so, says Derek Rollingson, manager of ICON Energy fund. "They're a tremendous value," he says. He figures investors get about $1.80 in value for each dollar invested in energy now.