What happened
A surge in oil prices brought the bulls into the energy sector on Monday. Two of the sector's top stocks, ExxonMobil (XOM 1.42%) and Chevron (CVX 0.27%), saw gains on the day thanks to this dynamic. The pair's share prices both climbed 3% higher, trouncing the slight (0.2%) rise of the S&P 500 index.
So what
Oil prices are certainly not the only factor affecting the sector's companies, but they do matter a great deal. It's no wonder, then, that investors piled into oil titles after prices hit a three-month high on Monday. Additionally, July saw the most significant monthly increase (by over 1%) since the start of 2022.
ExxonMobil and Chevron are two of the most important global energy companies. That's why investors often eagerly buy into -- or sell out of -- them whenever there is a dramatic lurch in oil prices.
As is often the case, a tightening supply is helping to push them higher. Output from Saudi Arabia, the planet's leading oil producer, saw a drop of 860,000 barrels per day (bpd) for July, according to a Reuters survey. That same poll found that the Organization of the Petroleum Exporting Countries' (OPEC) tally also fell by 840,000 bpd. Additionally, the U.S. has begun refilling its Strategic Petroleum Reserve, further pressuring supply.
Now what
Many oil industry pundits seem to think that the constricted supply will continue. They anticipate that the Saudi authorities will extend the country's monthly output cut of 1 million bpd, and that the current demand for petroleum should stay high.
