It’s one of the biggest stories in the world…

Oil stopped crashing.

As oil fell 75% to multi-year lows of $26.05, there has been little reason to buy it.

There was no catalyst.  No reason to get excited. 

Supply far outweighed demand, as it still does.  The world is still awash in oil and U.S. production hasn’t slowed enough to ease the glut issue.

Funds heavily weighted in oil took a massive hit.  The United States Oil Fund (USO), for example, fell 64% from its 52-week high of $21.50 in May 2015 to a low of $7.67.

But something interesting has been happening in the oil markets…

Over the last few weeks, oil has rallied from its $26.05 low to more than $33.90 – a 30% move… 

While a lot of that surge reflects hope fueled by an agreement between Russia and Saudi Arabia to freeze production at January levels, we also have to consider that oil hasn’t been reacting to bearish headlines as it once had…

For example, crude oil inventories jumped by another 3.5 millions barrels to 508 million, according to the Energy Information Association, increasing concerns that storage facilities – such as those in Cushing, Oklahoma – will soon run out of room.

Cushing is now 80% full.

Yet, oil prices have continued to push higher…

For Cushing supplies to run out of room says a lot -- considering it’s the largest oil-tank farm in the world with 73 million barrels of capacity.  As that facility has been filled almost to the brim, we’re beginning to see a spillover into other storage facilities throughout the U.S. Gulf Coast.

In fact, if we take a look at U.S. Gulf Coast storage inventories since the start of the year, they've increased by nearly seven million barrels this year… and could see even more increases, as they serve as alternative storage facilities to Cushing.

We also have to pay close attention to Iran, for instance, which is pushing forward with plans to add another million barrels of oil per day into an already drenched oil market… Iran also is not likely to join the production freeze organized by Russia and Saudi Arabia…

Again, despite that news, oil has moved higher.

Does that mean investors should run out and buy a bunch of oil stocks here?  No…

However, it’s still a good idea to at least dip a toe into the water, as we think much of the negative news is already priced in.

That’s why we recently recommended two oil stocks in The CHEAP Investor.  For the past few months, we’ve been searching for companies that have the assets to survive collapsing oil prices, as they should rebound in the next market upsurge. 

Already our subscribers are profiting.  Helix Energy (HLX) was recommended at $3.50 in the February issue, and it is up 22%.  We recommended McDermott International (MDR) in the March issue at $2.97, and it rose 16%.

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