Oil is climbing today, as it has been for several consecutive sessions. Ultimately, there are two primary causes for the gains in the value of the commodity, one acting as root support and the other acting as the catlystic event that gave the commodity legs. Nonetheless, oil is a massive market, and when oil flies, we tend to see gains in various stocks. Today, we’ll talk about:
- Why oil is headed up;
- the stocks that are seeing the most benefit;
- and what we’ll be watching for ahead.
Why Oil Is Headed For The Top
Oil, like any other commodity, is ultimately at the mercy of supply and demand. This means that when supplies fall and demand rises, prices rise. Adversely, when supplies climb and demand doesn’t , the value of the commodity falls. Here’s why we’re seeing gains in the price of oil at the moment:
- The Support – The support for the current rise in oil was put in place a couple of years ago, shortly after the oil supply glut sent the value of the commodity to incredible lows. This was when OPEC stepped in to curb supply in an attempt to balance the market. Back then, few thought that the efforts the oil cartel was making would lead to anything good, and while these efforts have led to minimal gains over time, they have also provided a foundation of support for the catalystic event that sent oil prices soaring lately.
- The Catalystic Event – Recently, the Trump Administration announced that it would be giving Iran a deadline to comply with the Nuclear agreement or sanctions would be imposed. With Iran being the third largest oil producer in OPEC, the threat of their oil not being available started the climb. Soon enough, sanctions did get placed, cutting Iranian oil from the market, ultimately leading to a dramatic rise as the global supply glut disappears.
Stocks That Are Benefiting
Just about every stock in the oil and energy sector is seeing gains today or has seen gains as of late. Here’s a list of those that are seeing the strongest movement by volume and percentage gain as a result of the strength in the price of oil:
- Chesapeake Energy Corporation (NYSE: CHK) – Chesapeake Energy is having an incredible day with one of the highest volumes of the day as well. Currently (12:13), the stock is trading at $4.32 per share after a gain of $0.26 per share or 6.38% thus far today.
- Danbury Resources Inc. (NYSE: DNR) – Denbury Reousreces is also seeing incredible gains, currently trading at $4.41 per share after a gain of $0.28 per share or 6.78% thus far today.
- Northern Oil & Gas, Inc. (NYSEAMERICAN: NOG) – Northern Oil & Gas is climbing, currently trading at $2.59 per share after a gain of $0.20 per share or 8.37% thus far today.
- VAALCO Energy, Inc. (EGY) – VAALCO Energy is currently trading at $2.39 per share after a gain of $0.31 per share or 14.90% thus far today.
- W&T Offshore, Inc. (NYSE: WTI) – W&T Offshore is also flying, currently trading at $8.73 per share after a gain of $0.50 per share or 6.08% thus far today.
- Ultra Petroleum Corp (NASDAQ: UPL) – Ultra Petroleum is up as well, currently trading at $2.28 per share after a gain of $0.16 per share or 7.36% thus far today.
- TransGlobe Energy Corporation (USA) (NASDAQ: TGA) – TransGlobe Energy is currently trading at $2.65 per share after a gain of $0.42 per share or 19.04% 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 the oil sector as a whole. With the supply glut shrinking, many believe that the current gains in the sector are simply the tip of the iceberg, and I happen to have the same belief. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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