Energy stocks dominate the list of top gainers in the S&P 500 as companies see big profits amid oil's surge to the highest price in nearly 15 years

• Energy stocks are dominating the list of new highs in the S&P 500 as oil prices approach 2008 levels.
• Investor appetite for energy stocks has increased as profits surge higher for the sector.
• The new highs could continue as travel demand heats up over the summer months and as supply remains constrained.

While the S&P 500 struggles to recover its year-to-date losses of about 13%, one sector continues to surge to multiyear highs: energy.

The energy sector has seen a remarkable two-year surge as oil prices continue to creep higher amid increased demand and constrained supply. The spike in oil demand comes as travel heats up over the summer months, and as economies continue to bounce back from the COVID-19 pandemic.

Supply constraints in the oil sector are also two pronged, as Russia's invasion against Ukraine has led to Western sanctions against Russian oil, and as US energy companies pulled back investments into oil production for years. The US oil rig count is still just one-third of what it was at its peak in 2014, according to data from Baker Hughes.

This supply and demand dynamic has led to WTI crude oil prices surging to their highest level in years, having hit a high of $119.98 per barrel in Tuesday trades. That's just 18% below its record of $147 per barrel reached in 2008, which one technical analyst thinks it will reach later this year.

Higher oil prices means higher profits for energy companies, and it's showing in their stock prices. Energy stocks continue to dominate the new high list in the S&P 500, and at least six energy stocks that are included in the S&P 500 hit record highs on Tuesday. Those companies include ConocoPhillips, Chevron, and Valero, among others.

Meanwhile, oil majors like Exxon Mobil and Hess are trading at multiyear highs. The energy sector traded up about 1% on Tuesday, is up more than 60% year-to-date, and has leapt nearly 270% from its COVID-19 low, when oil prices briefly dipped into negative territory.

While those stock price gains are astounding, so are the profit gains. The energy sector has seen revenue grow 14% in the first-quarter of 2022, while its profits soared 268% over the same time period, according to data from FactSet. In fact, the energy sector has been the largest contributor to year-over-year earnings growth for the S&P 500.

If the energy sector were excluded, the blended earnings growth rate for the S&P 500 would fall to 3.2% from 9.2%, according to FactSet, even though the energy sector represents just 5% of the index.

As long as oil prices remain high, profits for oil and gas companies should continue to rise, which in turn should help drive the ongoing surge in oil stocks.