Despite talk of a trade war, an OPEC-Plus agreement to boost oil production starting this summer and a rally in the US dollar, Brent oil prices ended the second quarter just under $80/bbl, the highest level since late 2014.

Even better, energy stocks were the top-performer in the S&P 500 for the second quarter with the S&P 500 surging 13.5% compared to a gain of just 3.4% for the S&P 500.

Over the past few years, oil prices and energy stocks have experienced numerous false dawns when investor attempted to call a bottom only to get burned as it became clear supply and demand fundamentals for oil remained weak.

We continue to believe this move is for real and, unlike most rallies over the past few years, it’s supported by real improvements in fundamentals. And, ironically, the OPEC-Plus agreement to boost output in late June may be the most bullish development for the energy patch in more than 4 years.

However, dangerous abound due to rapid changes underway in the global energy patch and it remains important to be selective.