What happened

Shares of Matador Resources (NYSE:MTDR) soared 20.8% in May, according to data provided by S&P Global Market Intelligence. Fueling the rally in the oil stock was a historic rebound in oil prices and a bullish analyst note.  

So what

In early May, an analyst at Imperial Capital raised their price target on Matador's stock from $6 per share to $11 per share. Imperial also maintained its outperform rating. One factor fueling that bullish view was Matador's stronger-than-expected first-quarter results, which it reported in late April. Imperial also has an optimistic outlook, believing that the oil producer will deliver better midstream and upstream results in 2020 and 2021. 

An oil pump with a sunny sky in the background.

Image source: Getty Images.

Matador also benefited from a monster rebound in oil prices last month. WTI, the main U.S. oil price benchmark, zoomed 88% on the month, its biggest rise in history. Several factors fueled that historic rebound, including fading concerns that the U.S. would run out of storage space as supplies declined and demand started rebounding. 

Now what

The outlook for the oil market has improved considerably over the past several weeks. Demand has snapped back as governments lifted restrictions on travel and non-essential businesses. Meanwhile, supplies have fallen due to production curtailments by OPEC and others. That improvement appears poised to continue now that OPEC has extended its initial output cuts through the end of next month. That catalyst should push crude prices up even higher, which could give Matador's stock the fuel to keep rallying.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.