A rising demand for energy with the resumption of economic activities globally, along with continued supply cuts by the world's largest oil producers, should keep driving oil prices higher. So, as direct beneficiaries of rising oil prices, we think Canadian Natural Resources (NYSE:CNQ), Ovintiv (NYSE:OVV), Whiting Petroleum (NYSE:WLL), and Vermillion Energy (VET) should be highly rewarded by investors in the near term. Let’s evaluate these companies.Oil prices rallied on Wednesday to trade above $70 a barrel, representing a 32-month high. This can be attributed primarily to rising demand as the global economic recovery drives a revival of industrial activities and mobility. Continued supply cuts by the world's largest oil producers are also supporting the rally.
Because OPEC and its non-OPEC partners recently confirmed that they will ease production cuts gradually, oil prices should continue rallying. Based on this, and a strengthening demand outlook, analysts expect oil prices to hit $80 a barrel or more this summer. Investors’ interest in this sector is evident in the SPDR S&P Oil & Gas Exploration & Production ETF’s (XOP) 12.8% gains over the past month compared to SPDR S&P 500 Trust ETF’s (SPY) 0.1% loss.
So, we think it could be wise to buy shares of Canadian Natural Resources Limited (CNQ), Ovintiv Inc. (OVV), Whiting Petroleum Corporation (WLL), and Vermilion Energy Inc. (NYSE:VET) because they are expected to benefit significantly from the rising oil prices.