A long-awaited rally in crude oil prices has helped the Club’s three oil-and-gas companies become some of our top-performing stocks over the past month. And with new signs the commodity could continue to rally this year, we’re sitting tight on our energy holdings. Brent crude, the global oil benchmark, and West Texas Intermediate crude, the U.S. oil standard, have both climbed by more than 10% since late June. Brent was up roughly 1% Thursday, at nearly $80 a barrel. WTI was trading up 0.72%, at more than $83 a barrel. Energy stocks linked to crude — including Club names Halliburton (HAL), Coterra Energy (CTRA) and Pioneer Natural Resources (PXD) — have risen on oil’s fortunes. Shares of Halliburton have climbed roughly 18%, while Coterra and Pioneer have advanced about 12% and 10%, respectively, since crude’s most-recent bottom in late June. Troubled pharmaceutical firm Bausch Health (BHC) has been the top-performing Club stock during that same stretch, advancing nearly 28%. “This was a move that many have expected to occur all year,” TD Cowen energy analyst Jason Gabelman said of crude’s recent rise. “A lot of investors, I think, have been … somewhat disappointed on oil being rangebound for the past few months in the low-to-mid $70s,” Gabelman told CNBC. Among the biggest drivers of the momentum has been signs that previously pledged production cuts from Saudi Arabia and Russia are finally taking hold, analysts widely said, helping address concerns investors had about excessive supply in the market. Russian production, in particular, has exceeded expectations throughout the year. But last week, nationwide crude shipments in Russia stood at 2.73 million barrels a day, down 1.48 million barrels per day from their late-April peak, according to data compiled by Bloomberg . Economic data also suggests oil demand is proving more resilient than investors initially expected, said Truist’s Neal Dingmann. “Not to say we’re certainly out of the woods on inflation or a recession,” Dingmann told CNBC, “but the picture is much better for some type of growth, even very minimal.” Mizuho analyst Nitin Kumar – who covers Coterra and Pioneer and has a buy rating on both stocks – said he believes the setup for crude prices remains solid throughout the second half of 2023. While the potential for a demand-destroying recession remains a big wildcard, Kumar said there’s a lot to be encouraged by on the supply side. The Organization of Petroleum Exporting Countries and its oil-producing allies, collectively known as OPEC+, has shown discipline on production and been willing to take action designed to shore up prices , Kumar said, even if the market has, at times, shrugged off such decisions . Saudi Arabia is the de-facto head of the OPEC cartel and Russia is the group’s largest partner producer. Saudi Arabia, Russia and the U.S. are the world’s three-largest oil producers. U.S. producers also have shown restraint, Kumar told CNBC, with domestic crude production hovering around 12.3 million barrels per day all year . Moreover, a year-over-year drop in U.S. rig counts points to “a bit of a decline in oil production” down the road, Kumar said. As of July 21, the number of active U.S. oil rigs stood at 530, according to Baker Hughes, down 11.5% from the same period in 2022. Taken together, Kumar said, “globally, except for a recession, you should be in an undersupplied scenario for the second half.” Others on Wall Street, including analysts at Goldman Sachs , also expect demand to outpace supply in the third and fourth quarters, supporting higher prices. In theory, when commodity prices are higher, our energy holdings can generate more free cash flow. And that money can be used to pay dividends and repurchase stock, a key reason we’re invested in the sector. That dynamic was on display last week, when Halliburton – our largest oil-and-gas holding, carrying a 2.1% weighting in the portfolio, as of Wednesday – reported better-than-expected free cash flow in the second quarter. While we locked in a small profit on Halliburton in mid-July , the company’s execution in the second quarter certainly pleased us. As an oilfield-services firm, Halliburton is a play on drilling activity. Pioneer and Coterra are set to report their second-quarter results on Aug. 1 and Aug. 7, respectively. On metrics such as revenue, earnings and cash flow, exploration-and-production (E & P) companies face difficult year-over-year comparisons. For most of the second quarter in 2022, crude prices were north of $100 per barrel amid shocks from geopolitical risks like Russia’s invasion of Ukraine — and subsequent Western sanctions on Russia oil sales — in February of that year. Against this backdrop, energy investors will be closely watching how companies’ well productivity stacks up versus last year, according to Truist’s Dingmann, who maintains hold ratings on Pioneer and Coterra. Management commentary on service-cost inflation is another area of focus, Dingmann said. If those costs continue to moderate, E & P firms should eventually see relief on their capital expenditures, assuming production plans are held constant. The Club’s take Our investment thesis in Pioneer has been rooted in its low production costs and high-quality acreage in the Permian Basin in western Texas and southeastern New Mexico. For Coterra, we continue to like its mix of oil-and-natural gas revenues — split roughly 50-50. Coterra’s exposure to natural gas bodes well long term, despite prices being down sharply from their 2022 peaks, because the U.S. is adding export capacity for liquified natural gas. Coterra is well-positioned to benefit as additional LNG facilities come online in 2024 and beyond . The bottom line is the oil rally may just be getting started — and, if that’s the case, our stocks linked to the commodity could see additional gains ahead. (Jim Cramer’s Charitable Trust is long CTRA, HAL and PXD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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A long-awaited rally in crude oil prices has helped the Club’s three oil-and-gas companies become some of our top-performing stocks over the past month. And with new signs the commodity could continue to rally this year, we’re sitting tight on our energy holdings.