US oil stocks ‘outrun fundamentals’ as prices surge

As oil flirts with $50 a barrel, investors are trading drilling stocks as if crude were selling for $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, SM Energy and California Resources have all quadrupled in value as the price of oil rose.