Oil Prices Are Rising: Should You Be Buying Cenovus?

A crisis in the Middle East has led to rising oil prices. And with prices of Brent Crude oil reaching close to $70 on Monday, there could be a lot more bullishness in the sector should concerns related to a low supply of oil persist.

One stock to watch for that’s been closely related to the movement of oil prices is Cenovus Energy Inc (TSX:CVE)(NYSE:CVE).

The oil and gas stock has never recovered since the downturn hit the industry in Canada back in 2014. Over the past five years, the stock is still down 45%.

While it has risen 30% over the past year, the stock has taken investors on a roller coaster, seeing wild fluctuations along the way. Although it appears from afar like it could be a bargain, trading well below its book value, the reality is that low oil prices alone may not be enough to help give the stock a long-term boost.

A challenging political environment in Canada for oil and gas companies makes it difficult for investors to see much growth potential. There’s no shortage of opposition and protesters when it comes to expanding or even replacing pipelines.

Cenovus was up more than 1% on Monday as a result of the developments and it has seen its share price spike in the past as a result of a surge in oil prices. The problem, however, is that kind of movement may not be sustainable and can be very short-lived.

Even if oil prices continue to rise, investors need to remember these are short-term impacts and that longer-term trends will prevail in the end.