U.S. crude futures crossed $50 a barrel this week for the first time since late October, surging on news of an OPEC production cut — the first such agreement in eight years.
"Basically, $50 is good for Permian Basin stocks," said Paul Sankey, senior oil and gas analyst at Wolfe Research. He recommended shares of Occidental Petroleum, which is the largest producer of oil in the field, according to the company's website.
Extracting oil from the Permian Basin, which spans west Texas and southeast New Mexico, is less expensive than it is in many major fields.
Pioneer Natural Resources and EOG Resources expanded their presence in the region in the last few months, and Sankey said the two companies would also benefit from $50 oil.
On the 24 occasions since 2001 when U.S. crude crossed above $50 a barrel, EOG Resources rose about two-thirds of the time, with a median return of nearly 5 percent over the subsequent three months, according to data analysis tool Kensho. Occidental Petroleum climbed about 70 percent of the time, with a median return of 3.1 percent, the data show.
Energy was the worst S&P 500 sector in 2014 and 2015, as oil prices plunged from above $100 in 2014 to below $30 a barrel early this year. Even before OPEC announced a production deal on Wednesday, several analysts were already expecting oil prices to recover slightly to $60 a barrel in the next several months.