Oil stocks sizzled on Tuesday after a soft start to the week, with shares of some notable names from the industry clocking big gains during the day. At their highest points in Tuesday trading, Occidental Petroleum (NYSE: OXY) stock surged 8.7%, while Devon Energy (NYSE: DVN) and Diamondback Energy (NASDAQ: FANG) gained 6% each.

Crude oil prices jumped more than 3% Tuesday, which explains the rally in these oil stocks. Investors in Occidental Petroleum, though, found an even bigger reason to load up on the oil stock while they still can, making it one of the best-performing oil stocks for the day.

The relationship between oil prices and upstream oil and gas companies is pretty straightforward: Rising crude oil prices fetch these companies more money for the oil they sell, and more money means bigger cash flows. Occidental, for example, can generate annualized incremental cash flows worth nearly $225 million for every $1 change in the per-barrel price of crude oil.

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Source Fool.com