Oil Prices Up 20%; Energy Stocks Rebound

Energy stocks are making a comeback after being left for dead earlier this year.

Photo Insert: The slashed output coincides with what’s been a busy summer of travel, heightening demand for crude.

The S&P 500 index’s energy sector has gained more than 6% during the third quarter so far, outperforming the benchmark index.

Energy stocks faltered at the beginning of the year, defying investors’ expectations for last year’s boom to accelerate on a lack of global supply, Krystal Hur wrote in an analysis for CNN Business.

That drop in energy stocks came despite OPEC+ producers, the cartel of oil producing countries plus Russia, announcing several output cuts in a bid to bump up crude prices. But energy stocks have finally started to gain in recent months.

Saudi Arabia slashed its output by one million barrels per day in July — a move it extended Thursday through September.

Those moves mark the country’s biggest production cut in years.

That’s helped boost crude prices, which are hovering above $80 a barrel after dipping below $70 earlier this year. US WTI crude oil prices have gained 22% since June 11, while global benchmark Brent is up by 19%.

The slashed output coincides with what’s been a busy summer of travel, heightening demand for crude.

Combined with a brightening outlook for the economy as investors grow more optimistic that the Federal Reserve could soon stop raising interest rates, the picture for energy stocks is looking better than it has all year.

“You kind of needed all of those things to happen at once,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth.

Recent quarterly earnings reports from oil titans showed a mixed bag. But more importantly, the companies issued forward-looking guidance that, for the most part, has given investors reason to be optimistic.

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