Energy Could Be Ready to Rally Again

This column was originally published on RealMoney on Nov. 22 at 12:00 p.m. EST. It's being republished as a bonus for TheStreet.com readers.

Crude oil may be bottoming out here and setting up for a strong 2006 rally. Will oil and gas stocks recover along with crude prices?

Energy stocks topped out in September, after Katrina spiked prices to all-time highs. However, the group was unable to sustain those levels and fell to earth in a persistent correction that's now in its 12th week. As I pointed out on Monday, there's good reason to believe the selloff is at or near sustainable lows.

Oil and gas equities performed unevenly last summer, with some stocks charging to new highs while others got stuck in the mud. In particular, oil service stocks pressed marginally higher but never enjoyed the strong rally that most of us expected after crude oil broke resistance in the low $60s. ...