Chesapeake Energy Corporation (NYSE: CHK) is having an overwhelmingly strong start to the trading session this morning, following up on gains that we’ve seen from the stock as of late. So, what’s the deal? The company hasn’t released any news of their own, so why is the stock flying? Well, the answer is because of the industry it’s in and what we’re seeing in that industry. Today, we’ll talk about:
- How CHK makes money and why right now is the right time for the company;
- what we’re seeing from the stock as a result; and
- what we’ll be watching for ahead.
CHK Is Flying… Here’s Why:
As mentioned above, Chesapeake Energy is having an incredibly strong day in the market today, and for good reason. The company is centered in the oil industry. In fact, the company is an American petroleum and natural gas company. As a result, CHK is a company that is ultimately at the mercy of oil and gas prices. Think about it, when the price of oil moves up, the company is able to make more money from the product it generates. When the price of oil is down, the opposite is true.
With that said, CHK is ultimately enjoying the gains that we’re seeing in the value of oil at the moment. As with any commodity, oil is at the mercy of supply and demand, and while demand is there, supplies are currently shrinking, leading to gains in value. In fact, after the oil supply glut reared its head, OPEC eventually changed policies, limiting the amount of oil it would produce. This set the stage for a catalyst ahead. While OPEC’s limits weren’t enough alone to balance the oil market, the catalyst came down the line recently when President Donald Trump and his administration announced that it would be moving forward with sanctions on Iran. Iran just so happens to be the 3rd largest producer in OPEC, and with sanctions, all of that oil production wouldn’t make it to the rest of the world. Talk about pinching supply! Ultimately, this proved to be the catalyst that sent oil on a tear for the top, and many experts believe that the gains will continue.
What We’re Seeing From The Stock
While Chesapeake Energy didn’t release any news of their own, the news surrounding the oil and energy industry as a whole proved to be enough to get investors excited. Of course, with the prospect of growing revenue and earnings, excited investors are sending the stock toward the top. As is almost always the case, our partners at Trade Ideas were the first to alert us to the gains. At the moment (10:51), CHK is trading at $4.26 per share after a gain of $0.20 per share (4.80%) thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on CHK. In particular, we’re interested in following the company to see how it takes advantage of the growth in oil prices that we’ve been seeing recently. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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