What: The share price of oil and gas producer Santos Ltd (ASX: STO) has fallen over 2% in early trade on Wednesday after the price of a barrel of oil slipped in trade overnight.

The downward pressure on oil was believed to (in part) be caused by a report that the Oil Minister for the United Arab Emirates commented that he was comfortable with how the oil market was rebalancing.

So What: It appears that global investors are beginning to view the $50 a barrel mark as a reasonable expectation for the foreseeable future.

That’s not to say the oil price couldn’t head higher or sink significantly lower in the near term, just that a view appears to have developed that the market is stabilising around current price levels.

There are of course numerous market analysts who have a more bearish outlook with some pointing towards OPEC member plans to boost output in the coming months, which could suggest that the rally has been overdone.

Now What: While long-term shareholders of energy producers such as Santos and Beach Energy Ltd (ASX: BPT) are nursing heavy losses, investors who picked the bottom of the market a few months ago have enjoyed enormous gains.

Santos’ share price is up close to 80% from its low of $2.46 in January this year. Meanwhile, the share price of Beach Energy has soared close to 100% since touching its low of 35 cents in January.

The dilemma these investors now face is whether to lock in their profits, or whether to make the difficult call on a long term expectation of a higher oil price.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.