Chesapeake Energy Corporation (NYSE: CHK) is having an overwhelmingly strong start to the trading week this morning, and for good reason. The price of oil is climbing, which ultimately means that good news is likely to hit the company ahead. Today, we’ll talk about what’s going on with oil, what we’re seeing from the stock as a result, and what we’ll be watching for with regard to CHK ahead.
Rising Oil Prices Send CHK Skyward
As mentioned above, Chesapeake Energy is having an incredibly strong start to the trading week in the market this morning, and for good reason. The price of oil is climbing. In fact, oil is currently trading at the highest price it’s seen since July of 2015 after Saudi Arabia’s crown prince, Prince Alwaleed bin Talal, increased his power in the kingdom. He did so through the launch of what is known as the anti-corruption purge.
Prince Alwaleed bin Talal recently said that he backed an extension to production cuts by OPEC, a group of the world’s largest oil production countries. As a result, OPEC will meet at the end of November to talk about extending the oil production cuts. Of course, if this does happen, it will be a great thing for the stability of the oil price as well as oil-related companies like CHK.
Moreover, there are other factors playing a role here. Over the weekend, leaders from Saudi Arabia, Russia, Kazakhstan, and Uzbekistan met in order to discuss the current condition of the oil market. All of these leaders said that they were willing to maintain restrictions on oil production to address the supply glut and continue to prop prices upward. In a statement, the Russian energy ministry had the following to offer:
“The participating states expressed satisfaction with the decline in commercial oil inventories and expressed their readiness to continue joint efforts in this direction.”
How CHK Reacted To The News
As we’ve come to expect, any time we see news that can positively impact a publicly-traded company, we can expect to see gains in the value of the stock that represents the company. In this particular case, the news surrounding oil is propping the value of oil upward, and due to the gains in oil, CHK is enjoying gains itself. Of course, our partners at Trade Ideas were the first to alert us to the movement. At the moment (10:57), CHK is trading at $4.04 per share after a gain of $0.31 per share (8.16%) 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 news surrounding the oil industry as a whole. With the coming OPEC meeting, any agreement to extend production cuts could lead to further gains in the value of oil, ultimately sending Chesapeake Energy Corporation shares even further upward. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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