What happened

Shares of Continental Resources (NYSE:CLR) jumped 32.5% in May, according to data provided by S&P Global Market Intelligence. Several factors fueled that rally, including the continued rebound in the oil market, which enabled the oil producer to start turning some of its wells back on line. 

So what

Oil prices continued climbing back last month, with WTI, the main U.S. oil price benchmark, rallying another 10% to around $40 a barrel. That higher oil price pushed most oil stocks upward last month, including Continental. One factor driving the oil market rebound was an extension of OPEC's historic market support agreement, which will keep the initial supply reduction rate in effect through the end of July. 

An oil pump and barrel on top of money.

Image source: Getty Images.

With oil prices climbing last month, it gave producers like Continental the confidence to restart some of their idled oil pumps. The company had shut in as much as 70% of its total output during May due to low oil prices, which made many of its wells uneconomic. But the company said last month that it would resume production at some wells in July, aiming to get its output up to an average of about 225,000 to 250,000 barrels of oil equivalent per day. While that's still 50% below its current production capacity, it's heading in the right direction.  

Now what

This year's oil market crash blindsided Continental Resources. Unlike many of its peers, it had no hedging contracts to cushion the blow if crude prices declined. Because of that, it experienced the brunt of the oil price collapse, forcing it to shut in most of its production as it became unprofitable.

But thanks to OPEC's help, the oil market's fundamentals are improving, taking crude prices up with them. That will provide a dual benefit to Continental since it will get a boost from both rising prices and its increasing output. As long as these trends continue, the oil company's share price could keep rising; the stock is still down about 50% for the year even after June's rally.