What happened

Shares of National Oilwell Varco (NYSE:NOV)Baker Hughes Co (NYSE:BHGE), and Core Laboratories (NYSE:CLB) are surging on May 18. As of 12:29 p.m. EDT, their shares are all up by 10% and climbing since trading opened today. 

Crude oil prices are up sharply today. At this writing, Brent futures for July delivery are up 9.2% and above $35 per barrel for the first time since early March. West Texas Intermediate crude futures for June delivery are surging even more, up 10.1% on the day. If today's gains hold, that will put WTI Crude also back to price levels last seen in early March. 

Worker setting pipe on a drilling platform.

Image source: Getty Images.

So what

Everything's going up today. In addition to oil prices surging, stocks of all kinds are climbing today. At this writing, the SPDR S&P 500 ETF Trust (NYSEMKT:SPY) is up 3%. There are a couple of things driving stocks and oil prices up today, including optimism around a COVID-19 vaccine, and hopes that oil demand is starting to pick up as economic activity increases in states that are opening up more of their economies

This has investors plowing cash into just about anything related to oil and gas. Oilfield services and equipment providers like these three companies in particular look like compelling "bounce-back" investments. Even after today's big gains, the three are still very beaten-down. Baker Hughes stock is down 41% year to date, while Core Lab and National Oilwell Varco shares are down 47% and 49%, respectively, this year. 

Now what

Today's movement is fueled by optimism that maybe the worst is over. But the reality is, a vaccine for COVID-19 is still likely to be a year or more away, and the limited economic data we have seen from states that have started opening back up indicates that a quick recovery may not be as likely as investors are betting on today. 

As to the oil sector, let's put some perspective on things. Today's big surge in oil prices has U.S. crude prices still trading in the low $30s. That's a price at which most shale producers still can't make any money. It's unlikely we will see a recovery in spending for the services and equipment provided by National Oilwell, Baker Hughes, or Core Lab anytime soon. Oil producers are still hemorrhaging cash and cutting costs, and the difference between $29 oil and $32 oil just means they're bleeding at a slightly slower rate. 

Yes, there will be winning stocks from the eventual recovery in the oil sector. But that recovery is still a very long way away, and investors should continue to step lightly and not end up too exposed to what could prove a more protracted period of low prices than a lot of companies can sustain.