What happened

As ugly as the 2020 oil market crash has been for American oil producers, it's been absolutely brutal for their cohorts north of the border. However, today's news that the European Union reached a massive $2.1 trillion economic stimulus deal, along with increasing hopes that a coronavirus vaccine could get approval sooner than expected, has investors rushing to buy Canadian oil stocks.

The following four in particular are rocketing higher as of 3:17 p.m. EDT on July 21: 

Canadian oil stock Price change on 7/21/20
Cenovus Energy Inc. (NYSE:CVE) 12.6%
Crescent Point Energy Corp. (CPG) 15.2%
Canadian Natural Resources Limited (NYSE:CNQ) 11%
Suncor Energy Inc. (NYSE:SU) 8.8%

Source: YCharts.

So what

Oil prices around the world are climbing today on the news that the EU is set to inject a massive amount of stimulus into its economy. This should result in an increase -- even if only temporary -- in oil demand.

On the long-term basis, multiple reports in recent days offer reason to be hopeful that the push to develop a vaccine for the coronavirus that causes COVID-19 will pay off. Yesterday, news came out that AstraZeneca's (NYSE:AZN) AZD1222 vaccine candidate reported positive results in an early-stage trial, and that phase 3 clinical trials, including much larger numbers of subjects, have already begun around the world. 

Oil sands processing equipment.

Canadian oil sands processing. Image source: Getty Images.

If the phase 3 results deliver positive results, including both giving patients antibodies to fight off the SARS-CoV-2 virus and being safe for patients, it would be a massive breakthrough for humanity to beat this deadly pandemic. 

Now what

It's not just Canadian oil stocks surging today. Oil giants are surging along with U.S. shale producers and every other subsector of the oil and gas value chain. The oil and gas sector remains one of the most beaten-down groups of stocks, and investors looking for an opportunity to profit are piling in on anything viewed as offering some positive momentum for the struggling industry. 

At recent prices, major crude oil benchmarks are still down sharply from prices at the beginning of the year, while Canadian crude prices are even lower. And the reality is, for many North American oil producers -- on both sides of the U.S./Canada border -- prices are still too low to profit, and weak demand is still a major problem. 

For this reason, investors should step lightly in the oil patch. There are opportunities to be had, but today's good news could easily be followed by "bad" news tomorrow that sends prices falling again. If you decide to invest in the oil patch, focus on the downside risks first: Prices and demand could stay lower for longer than you expect, and the coronavirus pandemic could be the reason why.