Pacific Ethanol Inc (NASDAQ: PEIX) is having an incredibly strong start to the trading session this morning, following up on the tremendous gains seen on the stock yesterday. While this is another company that has not released any news, there’s a good reason for the gains. Today, we’ll talk about:
- Why PEIX is headed up;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
Why PEIX Is Headed For The Top
As mentioned above, Pacific Ethanol is having an incredibly strong start to the trading session this morning, following up on more than 40% gains seen yesterday. Nonetheless, chances are that the gains are far from over. So, what’s the deal? It all has to do with President Trump.
Various reports are surfacing suggesting that President Trump will announce that a summer ban on sales of high-ethanol fuel will be lifted. This summer ban is ultimately to maintain supply of ethanol and other biofuels as refineries are required to continue adding biofuels to the pool of available fuel in the United States.
The reports suggest that at or around 3:00 PM Eastern today, Trump will announce a lift on the ban. Should this take place, demand for ethanol, the flagship product at PEIX, will increase. Of course, as the law of supply and demand suggests, when demand increasses, so too does the price of the commodity. Therefore, PEIX may soon benefit from increasing prices of Ethanol.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of Pacific Ethanol, the company didn’t release any news of its own. However, with the news that Trump will be lifting the ban on high-ethanol fuels for summer sale, investors are expecting for a spike in demand to lead to increasing ethanol prices. Considering that the company’s flagship product is ethanol, it comes as no surprise that investors are excitedly awaiting the announcement and pushing the stock up in the process. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:01), PEIX is trading at $3.24 per share after a gain of $0.55 per share or 20.44% 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 PEIX. In particular, we’re interested in following the story surrounding the potential lift of the high-ethanol blend summer sales ban. Should this take place, the gains we’ve seen on PEIX in the premarket today and yesterday could be just the tip of the iceberg. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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