Oil Stocks Stage a Massive Rally

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By Jacob Maslow

oil barrels - rising pricesCrude oil has started to surge again earlier this week thanks to unexpectedly strong demand both in Asia and the United States. While it’s true that US oil inventories are its highest in more than eighty years, it seems that the economy of Asia and the United States have picked up to a high enough level that demand is spiking up unexpectedly. According to figures coming out of one of the biggest oil storage hubs in the United States, Cushing, Oklahoma, their over total inventories fell by close to 300,000 barrels in the past week alone. Put all these factors together and you can understand why the stocks of otherwise beaten up companies like Transocean.

How can Halcon Resources (NYSE:HK) and SandRidge Energy (NYSE:SD) have rallied? We’re not just talking about a regular rally. We’re taking a nice double digit rally. In the case of SandRidge, the stock rallied by close to 11 %. Not far, how can Resources spiked up by close to 17% ? And Transocean registered a healthy 10.21% when they rally. It remains to be seen whether oil will continue its upward trajectory. You have to understand that there seems to be a natural ceiling for oil. It can’t go past a certain price because once it reaches that point, shale oil fields start to kick in and this would unleash another flood of supply. It’s definitely going to be interesting how oil will fare in the coming weeks.

Pay attention to the ongoing economic recovery in Europe and parts of Asia. Assuming that the recent disappointing US jobs numbers are temporary, a global economic recovery might push oil upwards again.

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