Oil stocks outrun fundamentals with 300% gains in 3 months

Chicago

AS OIL flirts with US$50 a barrel, investors are trading drilling stocks as if crude were selling for US$80, and that's the kind of optimism that leads to corrections.

Legendary short-seller James Chanos said last week that he's considering wagering against explorers because they've got ahead of themselves. In the last three months, Denbury Resources Inc, SM Energy Co and California Resources Corp have all quadrupled in value as the price of oil rose by just 52 per cent.