What: The oil price continued to surge on Thursday with the commodity rallying to US$52.70 a barrel for Brent crude.
This takes the gains in oil to over 70% since it hit a low in January of US$30.70, but the price still remains well below the one-year high of US$69.85.
So What: The rally in the oil price has understandably led to a flow on rally in companies exposed to the oil sector.
In the past five trading days alone, the share price of Santos Ltd (ASX: STO) has rallied 6.4% and Beach Energy Ltd (ASX: BPT) shares have jumped 6.9%.
Interestingly, energy giant Woodside Petroleum Limited (ASX: WPL) has bucked the trend to fall 1.5%.
Now What: While it wouldn't be surprising for oil to see profit taking in the near term, the oil price does appear to have some impetus for further gains with production outages in Nigeria and reports that US crude inventories have declined.
While the supply-demand dynamics suggest further upside could lie ahead in the oil price, investors investing in oil stocks today are late to the party. In fact, there is a good chance that a higher oil price has already been factored into shares exposed to the energy sector which means that further upside in oil stocks could be limited.
