Source: National Weather Service

It’s hard to know at this point whether this interest will turn into a love affair or merely produce the latest one-day stand. But it’s easy to see that the outlook has brightened considerably since Jan. 13.

That was the day WTI crude bottomed at $91.45 per barrel and not coincidentally at all the day the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP) found itself down a quick 5.5 percent on the year and retesting December lows.

Now here we are six trading sessions later and the XOP is back in black year-to-date and challenging December’s highs. And the WTI is now back above $96 a barrel and also up year-to-date.  Prophets of the eventual crude price crash will need to pay up for more tangible sources of warmth for at least a while longer, it turns out.

The long-range risks to the bull case for oil are out there still. There’s every likelihood that Iran and Libya will one day attempt to reclaim their role as major oil exporters, and when they do the world may not be ready to absorb all that extra supply without an enticing discount.

Similarly, mounting exports of US liquefied natural gas and liquefied petroleum gas will drain more and more of the foreign demand for crude in the coming years, as will the new gas-fired US chemical plants that could put naphtha-burning rivals in Europe and Asia out of business.

But these are long-term stories, and neither Iran nor LNG will be big contributors to the global supply-demand balance in 2014. The Iranian oil industry remains a shadow of its former self, with the additional trickle of exports permitted under the interim UN deal possibly representing its peak current capacity. Libya, too, remains more of a price support than a drag for now.  Meanwhile, the bulk of the US LNG exports won’t start for at least five more years.

And while all of these potential supply sources remain off in the distance, demand in emerging and developed markets alike is growing right now. That was the point highlighted by the International Energy Agency (sponsored by the major oil consuming nations) when that group raised its 2014 demand forecast Tuesday. It now expects record global demand of 92.5 million barrels per day (bpd) this year. That would represent an increase of 1.3 million bpd, 50,000 more than previously estimated by the IEA. Notably, the change was attributed to stronger developed markets demand, which grew in 2013 for the first time in three years.

This change may have caught the energy industry a bit flatfooted. Long  before the current cold snap, US distillate inventories (a category that includes heating oil) were near the bottom of their range for the past five years. The same is true of propane stocks, which were depleted when last fall’s bountiful, wet grain harvests required more than four times as much propane for drying as in 2012. Midwest propane stocks are now the lowest in the 21 years of recordkeeping, with prices at the Conway, Kansas, hub ranging as high as $3.57 a gallon Wednesday, according to Bloomberg News. That’s nearly triple what the fuel fetched on the Texas coast.

Source: US Energy Information Administration

Even as the cold weather lifts demand it’s likely to hurt the output of crude from North Dakota all the way south to Texas, as well as of natural gas in Pennsylvania and West Virginia. Winter will eventually relent, of course. But there’s nothing to suggest that once it does energy will necessarily get cheap in a hurry. And if demand should continue to surprise, there’s certainly scope for prices to go higher.

The calculus that prices aren’t about to cave is working its way into the decisions of some of the savviest value investors. David Einhorn, the top hedge fund manager whose holdings already include TES Growth Portfolio holding WPX Energy (NYSE: WPX) and several other big energy position besides, unveiled two more energy stakes in his latest letter to investors. Einhorn established a position in BP (NYSE: BP) modestly below current levels, and argues the oil giant’s new focus on asset sales and share repurchases could produce a return of more than 40 percent from this point. He also shopped the sale in Anadarko Petroleum (NYSE: APC) in the wake of last month’s potentially costly liability ruling against the oil producer. Anadarko’s shares popped 3 percent on the news, extending a still very modest recovery since the bad news broke.

How does the momentum of energy stocks stack up against the broader stock market? I judge technical strength based on the simple system developed by StockCharts.com, which ranks ETF, as well as US large caps, midcaps and small caps against each other on a scale of 0 to 100. Among ETFs, the XOP now scores 70.6, placing in in the strongest third of the market. The larger-cap Energy Select Sector SPDR (NYSE: XLE) is in the middle of the pack at 49.1, held back by the recently underperforming integrated oil majors and refineries.

Doing much better at 90.5 is the natural gas producer-focused First Trust ISE Revere Natural Gas ETF (NYSE: FCG), paced by Penn Virginia (NYSE: PVA) and Magnum Resources (NYSE: MHR), two drillers riding growing market appreciation for the ultimate profitability of their shale assets. PVA has soared an eye-popping 31 percent since New Year’s, while MHR has rallied 19 percent over the same three weeks, so this may not be the best time to hop on the bandwagon. But PVA in particular could keep running based on its modest valuation and expanded position in the Eagle Ford, and we’ll be watching it closely for opportune entry points.   

The technically strongest ETFs in the entire universe of such products, in or out of energy, track the performance of solar stocks. The Market Vectors Solar Energy ETF (NYSE: KWT) tops the StockCharts rankings at 99.9. Growth Portfolio Best Buy First Solar (Nasdaq: FSLR) has been shut out of that party, but we remain confident that it will get its due in due time.

Another Growth Portfolio pick, the refiner Valero (NYSE: VLO), tops the StockCharts list as the leading energy stock in the S&P 500 with a technical strength rating of 96.2, and that was before it sharply raised earnings expectations Wednesday evening. Valero has returned 30 percent since we recommended it on Oct. 24.

Pacing the midcaps has been midcontinent producer Cimarex Energy (NYSE: XEC), while Penn Virginia is the small-cap energy stock with the most momentum, though recent Growth Portfolio addition Carrizo Oil & Gas (Nasdaq: CRZO) isn’t far behind. Carrizo has a StockRank score of 85.9, and has returned nearly 10 percent since joining our Aggressive Portfolio on Dec. 11.

As for the biggest portfolio winners year-to-date, the unquestioned leader in LNG tanker operator GasLog (NYSE: GLOG), which is up more than 14 percent in 2014 (and 20 percent since Jan. 13) on plans to sponsor a master limited partnership and a deal to expand its fleet by buying three more LNG carriers covered by long-term charters. Marcellus gas gatherers MarkWest Energy Partners (NYSE: MWE) and EQT Midstream (NYSE: EQM) are up roughly 5 percent apiece in the new year, as is the leading land rig supplier Helmerich & Payne (NYSE: HP).  As long as steady crude prices and rallying natural gas provide rates of return of 50 percent and up from the best shale wells, all of these names have lots of growth ahead.