NEW YORK (TheStreet) — Oil prices surged by almost 10% Wednesday to $49.90 as the OPEC deal to cut production by 1.2 million barrels per day is expected to help ease the negative effect of the global oil glut on the commodity’s price.
The gains seen today in oil stocks are not sustainable, according to Tortoise Capital Advisors portfolio manager Rob Thummel, who was a guest on CNBC’s “Power Lunch.”
However, “the table is really set now for the energy sector,” he claimed. The one uncertainty that was still on the table before today was whether OPEC would go through with a deal. Now we know the cartel is going to cut production and prices will stabilize.
“Now investors can focus on really what’s important. Less technical and more fundamentals,” Thummel claimed.
The U.S. oil and gas sector fundamentals are “really, really strong,” he noted. A combination of production growth and rising prices means that it will see accelerated cash flow growth.
The companies that operate in the Permian Basin stand to gain in particular, as that area will see double digit production growth between now and the end of the decade, he claimed. EOG Resources (EOG) alone is expected to grow production by 15% to 20% in the next decade and is a good place to be, as our energy infrastructure stocks, according to Thummel.