Market observers and analysts argue that US energy stocks are in a position to outperform broader equity markets this year, even if oil prices don't move higher.
USA crude is trading at a hefty discount to Brent, the global marker, thanks to sharp rises in US production to 10.7 million barrels per day, which has left the American domestic oil market well supplied.
And U.S. economic sanctions against Iran are likely to crimp that country's oil output, keeping oil prices elevated, even as analysts debate what the immediate impact of the sanctions will be. After prices slipped in Monday morning trade, Brent futures climbed as high as $78.20 a barrel, with WTI climbing close to around $71.13 a barrel.
US light crude was 5 cents higher at $71.01 a barrel, also not far off its highest since November 2014.
A lot will depend on how other major oil consumers respond to Washington's action against Tehran, which will take effect in November.
Crude oil prices have increased more than 10% over the past month after President Donald Trump signaled it is likely the USA will withdraw from a 2015 worldwide agreement with Iran that eased sanctions in return for curbs to the country's nuclear program, the Wall Street Journal reports. Strong growth in demand due to a robust world economy has helped remove the glut.
The most recent EIA study, included in the agency's short-term energy outlook, showed that global production of oil outside Iran averaged 92.4 million barrels per day from February to March, compared to 91.0 million bpd from 2015 to 2017.
OPEC has also predicted that U.S. drillers outside its group will pump 59.62 million barrels per day this year, or 1.72 million barrels a day more than last year.
With the U.S. drillers producing a record 10.7 million barrels a day, according to preliminary weekly data from the Energy Information Administration, the United States is approaching world's top producer Russian Federation, which pumps about 11 million barrels daily.
OPEC, along with Russian Federation and several other producers, has been limiting its output since January 2017 in order to drain a glut of oil that caused a historic price crash.
"Major emerging economies' growth dynamics have thus far counterbalanced this soft spot, and global growth may recover in the remainder of the year due to USA fiscal stimulus and a rebound in OECD growth".
Prices received a boost last week following President Donald Trump's announcement on May 8 that the United States would withdraw from the Iranian nuclear deal.
"It should have risen considerably further, driven primarily by the Permian Basin shale play", said a note compiled by Commerzbank analysts.
The company's revenues increased "on the back of higher crude oil prices and optimization in sales channels despite the remaining constraints in production within the OPEC+ Agreement", it said on a statement issued on Monday.
This estimated growth rate was revised higher by 25,000 barrels per day compared to last month's estimates.