Brent futures, also represented by the exchange-traded fund United States Oil (USO), jumped above $115 in June as geopolitical conflict in both Ukraine and Iraq led speculators to worry about supply disruptions.
The move in oil prices sent energy stocks including Exxon Mobil (XOM - Get Report), Chevron (CVX), Schlumberger (SLB), ConocoPhillips (COP), EOG Resources (EOG), and Occidental Petroleum (OXY) higher.
USO data by YCharts This could be the case in 2014. The underlying global economy remains in a gradual recovery, with central banks across the world continuing to enact simulative policy. International Monetary Fund Managing Director Christine Lagarde signaled on Sunday that her institution may cut its global growth forecasts for this year as investment is still weak and risks remain in the United States economy. "The global economy is gathering speed, though the pace may be a bit less than we previously predicted because the growth potential is lower and investment" Lagarde told the Cercle des Economistes conference in Aix-en-Provence, France. A robust global economy would increase demand for oil, and thus lead to a sustainable increase in prices. Speculative supply disruptions, however, lead to volatility in oil prices, which means prices may fall to new lows as quickly as they spike above $115. At the time of publication the author had no position in any of the stocks mentioned. Follow @macroinsights This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.