The Oil Search Ltd (ASX: OSH) share price is surging higher in Tuesday’s session. Shares in the Aussie oil exploration and production company have jumped more than 5% today despite no announcements to the ASX.
So, what’s driving the Aussie energy producer’s valuation higher right now?
Why the Oil Search share price is surging 5% on Tuesday
Perhaps unsurprisingly, the clues to today’s energy share price gains lie in commodity markets.
Crude oil prices have been tearing higher lately. Reduced supply has meant producers are dipping into their inventories in a bid to meet demand. That contrast has sparked a rally in crude oil prices which continued overnight.
Brent crude jumped 1.73% to US$79.44 per barrel on Monday to cap three straight weeks of price gains. Meanwhile, West Texas Intermediate (WTI) futures gained 2.04% to US$75.49 per barrel and hit its highest point since July.
Higher oil prices are good news for producers like Oil Search. It means a higher average realised price which helps to drive earnings for the company.
That’s been reflected in the Oil Search share price which has rocketed more than 5% in Tuesday’s session. Shares in the Aussie energy group are now up a whopping 14.8% in the past 5 days.
That volatility has been reflected in the company’s share price all year. Oil Search shares are outperforming the S&P/ASX 200 Index (ASX: XJO) this year with 15.1% gains but it has been a bumpy ride for investors.
Tuesday is shaping up as another good day for the Oil Search share price with the ASX energy share adding more than 5% at the time of writing.
With oil prices continuing to climb, Oil Search remains one to watch in 2021 as the world eyes a re-opening in the post-COVID-19 environment.