Image source: Apache Corporation.

What: Shares of Apache (APA -1.66%) jumped double digits in April on the back of a rally in the crude oil market and some praise from the analyst community.

So what: Crude continued its torrid rally off the bottom, jumping more than 20% last month. Fueling that oil price enthusiasm was growing optimism that the oil market is getting closer to closing the gap between supply and demand. 

That improving oil price has analysts starting to pick their favorite oil stocks for what appears to be an improving oil market, with Apache catching the eye of analysts at both Wells Fargo and Simmons. In fact, Wells upgraded it from market perform to outperform on the basis of the company's solid balance sheet and international assets, which put it in position to outperform even if oil prices stay weak.

Meanwhile, Simmons gave the thumbs up to nine E&P stocks, including large-cap names such as Apache and Concho Resources (CXO). It sees these stocks having an average potential upside of 13% based on its view of oil prices. What was noteworthy about the names on its list was that most had a heavy presence in the Permian Basin. Apache, for example, spent the past few years streamlining its portfolio, which is now anchored by the Permian Basin as its key growth driver. Concho Resources, likewise, put its focus on that basin, which is now its only operating area. That's important because the Permian is the place to be right now because it still offers solid drilling returns at current oil prices. That not only enables both Apache and Concho Resources to still make decent money during the downturn, but it also positions both to really cash in when conditions improve.

Now what: With the oil price improving, investors and analysts are growing more optimistic about Apache's future. That optimism is based not only on the company's solid balance sheet, which has it well positioned to weather the storm, but also on its opportunity set in the Permian Basin. It is a position that is still delivering solid returns, which will only improve along with the oil price.