Australia's energy and gas stocks are on a tear today, providing plenty of support for the broader market after the price of oil rose for the second session in a row overnight.
Oil halved in price between June 2014 and January 2015 as a result of faling global demand and skyrocketing production (exacerbated by the Organisation of Petroleum Exporting Countries' [OPEC] decision to not impose a production ceiling on OPEC producers), but the resource has finally gained some traction, having risen roughly 37% since its lowest level.
The resource has extended that rally this week with the Fairfax press showing that US crude oil prices rose nearly 3% to US$60.72 a barrel overnight while Brent crude, which is the global benchmark, experienced its strongest lift in more than a week, rising 2.3% to US$66.54 a barrel.
The rally followed a report released by the Department of Energy which showed a decline in US crude inventories for the third consecutive week by approximately 2.7 million barrels. Meanwhile, daily crude production also declined by 112,000 barrels to 9.26 million barrels per day, which has likely come as a result of the closure of several hundred oil rigs around the country.
While the broader sharemarket has remained flat for most of the session, stocks in the energy sector are bouncing on the resource's price surge. Woodside Petroleum Limited (ASX: WPL) and Santos Ltd (ASX: STO) have lifted 1.9% and 1.3% respectively, while Senex Energy Ltd (ASX: SXY) and Sundance Energy Australia Ltd (ASX: SEA) are up 2.9% and 2.5% each.
Indeed, the opportunity to cash in on the resource's strong recovery is tempting, but it is also a risky ploy to build your wealth. While oil prices have made a stunning recovery so far this year, there is a chance that fortunes could change, quickly, which could result in enormous losses for those investors left exposed.
As such, investors with a strong tolerance for risk may want to look at putting some cash to work in the sector, but those who aren't looking for an adrenaline rush would be wise to pass on the opportunity and put their money to work in other promising stocks. As a perfect example, growth in the online technology sector continues to boom and there is one ASX-listed company in the box-seat to benefit.
