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Energy Names Take Off as Oil Returns to Pre-Pandemic Levels

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U.S. oil prices rose by 2% on Monday to return to their pre-pandemic levels, erasing losses suffered during the coronavirus crisis. Taking investors on a roller coaster ride, the commodity has made a stunning rebound — from the depths of minus $38 a barrel in April to reclaim a 13-month high yesterday. The oil market's gain added to last week's rally, which saw the WTI surge around 8.9%.

The American benchmark gained $1.12 to end the day at $57.97 per barrel. Meanwhile, the international Brent crude futures settled at $60.56 per barrel, up $1.22, or 2.1% from their last close. Both contracts hit their highest since January 2020.

Momentum Coming Back to the Market

The energy space has been rallying for the past few months on continued vaccine-related developments and their successful deployment around the world that offer hope for an earlier-than-expected pickup in the commodity’s demand. Crude has been driven up further by the lid on production from OPEC+ members and on top of that, Saudi Arabia’s surprise pledge to reduce oil output by 1 million barrels per day in February and March.

Optimism related to the passage of the latest stimulus from Washington, easing coronavirus infections, signs of robust demand in the world’s second-largest oil consumer, China, and President Joe Biden’s pushback against the immediate lifting of Iranian sanctions have added to the market’s bullishness.

Energy Stocks Soar

The string of catalysts pushed the Energy Select Sector SPDR — an assortment of the largest U.S. energy companies — up more than 4% on Monday to be at the top of the S&P sector standings.

In fact, some of the top gainers of the S&P 500 included energy-related names like Marathon Oil (MRO - Free Report) , Occidental Petroleum (OXY - Free Report) , Apache Corporation (APA - Free Report) , Diamondback Energy (FANG - Free Report) and Hess Corporation (HES - Free Report) . Marathon was the top-performing stock with a gain of 13.1%, followed by Occidental (12.81%), Apache (10%), Diamondback (7%) and Hess (6%). Meanwhile, the only energy representative in the 30-stock Dow Jones industrial average, Chevron (CVX - Free Report) — carrying a Zacks Rank of #2 (Buy) — was up around 2.5%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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