Much has been made of the stealthy move in the oil patch recently, with some commentators tying it to the recent upheaval in Saudi Arabia. Although that story is filled with intrigue, the most important news from the Middle Kingdom is its commitment to cleaning up the global oil glut.

The glut was triggered by Saudi Arabia in 2014 in an effort to derail the U.S. fracking miracle. When the country began flooding the world with crude, oil traded north of $100 a barrel. Today, it’s down 46% from its highest point.

Oil struggled for a long time, falling as low as $42 a barrel in June. However, the combination of OPEC caps, rig counts plateauing and increasing demand gave crude the old one-two-three punch and lifted West Texas Intermediate (WTI) more than 35%.

All year long I thought $55 a barrel (perhaps even $60 a barrel) was possible, but I am surprised that those levels were reached so fast and so quietly.

Two Ways to Play the Crude Rally

It’s been a long time coming, but we’re finally seeing the energy sector and oil stocks in particular start to gain some ground. That means it’s time to take a look at your exposure to the oil patch.

There are a variety of stocks that I’m either recommending or keeping a very close eye on as potential plays on the rally. I’ll share two with you now. As long as the strength in crude continues, each is in good position to benefit.

1. Occidental Petroleum (OXY)

Occidental Petroleum is an international oil and gas company with 2.5 million acres in the Permian Basin. The rebound in oil has largely been a Texas story led by growth in the Permian Basin. Of the 406 additional current rigs in North America, 248 are in the Permian. In fact, it’s an area that continues to grow and attract major investments.

OXY is one of the largest oil and gas companies in the United States based on market cap, and it also has operations in the Middle East and Latin America.

The company struggled with the weakness in oil prices, but management has finally got it together with respect to execution and reported back-to-back earnings beats that moved the earnings consensus for 2018 up to $1.43 a share from $1.29.

The shares are down 17% in the last three years, but they’re now coming off the bottom of a trading channel. Ultimately, a close above $77 could turn OXY into a momentum stock.

2. Continental Resources (CLR)

Continental Resources is the largest leaseholder and one of the largest oil producers in the Bakken of North Dakota and Montana, considered the nation’s premiere oil field.

The stock has been on the move recently after reporting third-quarter results on Tuesday. Earnings of $0.09 a share were $0.05 ahead of Wall Street’s estimate, and revenue climbed 38% year-over-year to also beat the consensus. But even more importantly, CLR is pumping out more barrels per day, which many naysayers claimed wouldn’t happen. The company produced 129,582 barrels per day in the third quarter, up 30.5% from 99,251 last year.

What’s interesting here is the fact that 20% of the stock’s float is shorted as major players on the Street have been dissing this company for months. If results continue to come in as they have, watch for a serious squeeze.

There’s no question that CLR represents higher-than-normal risk in the current environment, but looking at the chart I think the stock has potential up to $54.