OPEC is tightening supply, which is causing gas prices and sector shares to rise.
The cuts announced by OPEC have already caused the WTI price to rise by six percent since Sunday.
A Bank of America statement estimates that stocks in the sector have an average upside potential of 31 percent.
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Oil supply will start to tighten from May and remain tight for the rest of the year.
On Monday announced the Organization of the Petroleum Exporting Countries (OPEC).that it will cut oil production by more than 1.66 million barrels a day. The group said this was a “precautionary measure” to stabilize the oil market.
This is bad news for motorists at the petrol station, because the price of petrol will rise. But it could be good news for stocks in the sector.
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Production cuts announced by OPEC helped oil rally above $81, up about 6 percent since Sunday. As a result, the shares of companies such as Exxon Mobil, Shell and BP by up to five percent.
According to Bank of America analysts, the cuts are a signal that oil prices will be supported at $80 a barrel. In a note on Monday, they added that this will boost market confidence in stocks in the sector, which have an average upside potential of 31 percent – though not for all stocks.
Here’s a list of 17 stocks the bank recommends buying:
1. APA Corporation
Market capitalization: 11.213 billion US dollars (about 10.289 billion euros)