What the big oil earnings are telling us

Energy stocks have seen a strong bounce over the past 1½ months, but a stronger sign that the sector has turned a corner may lie in recently reported earnings.

Chevron, Exxon Mobil, Royal Dutch Shell and BP soundly beat Wall Street estimates when they reported their first-quarter earnings last week. Though the oil giants saw lower revenue and profit compared to the previous year, the results suggested they may not have been in as bad a situation as previously believed.

Meanwhile, timing may also work in their favor. In the last two weeks of the quarter, crude oil began to bounce back from multiyear lows. Since March 18, oil has rallied 36 percent, helping boost the likes of Exxon Mobil and Chevron.

According to one trader, the larger energy names can expect to see a rebound down the road.

"The majors are going to do really well, as demand picks up and you see the price of oil start to move higher," said David Seaburg, head of equity sales trading at Cowen & Co.

But that rally may not happen right away. Stacey Gilbert, head of derivative strategy at Susquehanna, notes that volatility in the energy sector has softened as crude oil's volatility also simmered.

"The risks priced into these stocks are decreasing," she said. "We're not expected to see nearly the size of the moves that we've seen historically. I wouldn't say the trend is bullish or bearish."

In other words, the jury may still be out on an energy revival. "If anything, it looks like we're range-bound at least for the next couple of months here," Gilbert said.

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