(REN) (CHK) (SDRL) | Oil Stocks Are Having An Incredible Day!


Resolute Energy Corp (NYSE: REN) | Chesapeake Energy Corporation (NYSE: CHK) | Seadrill Ltd (NYSE: SDRL)

Resolute Energy, Cheasapeake Energy, Seadrill, and several others in the oil industry are having an amazing day in the market today. The gains are happening for good reason. A Saudi Arabian official made a shocking comment with regard to oil. Today, we’ll talk about the comment, why it was so shocking, what we’re seeing from oil and energy stocks as a result, and what we can expect to see from stocks like REN, CHK, and SDRL ahead.

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Surprising Comments Made By Khalid al-Falih Boost REN, CHK, and SDRL

Khalid al-Falih is the energy minister in Saudi Arabia. As such, anything he says with regard to the oil and energy market is likely going to be met with quite a bit of movement in the market. With that being said, Falih surprised oil and energy investors today, sending stocks like Resolute Energy, Chesapeake Energy, and Seadrill heading upward.

In a statement Falih spoke with regard to what he expects to see from the price of oil. In his comments, he caused excitement among REN, CHK, and SDRL investors by saying a 20% rally in crude oil prices was “not unthinkable…” In a key snippet from that statement, he had the following to say:

I think the role of responsible producers around the world, and Saudi Arabia considers itself to be the leading one, is to try to balance supply and demand in a very reasonable way…”

Why This Is So Surprising

The comments weren’t the only thing that sent REN, CHK, and SDRL upward.  Another reason these stocks went so high was the fact that the comments were so surprising. The truth is that, due to political conflicts, Saudi Arabia has been one of the key reasons that we’ve seen a continuation in declines in oil in the first place. Even after the OPEC deal was announced, there were still concerns that the deal would fall apart.

However, companies like Resolute Energy, Chesapeake Energy, and Seadrill – as well as their shareholders – are all given new hope. At the end of the day, Saudi Arabia seems to be taking a sincerely aggressive approach to improving the supply and demand of oil. As a result, there are less concerns that we’ll see further declines in the price of the commodity.

What We’re Seeing In The Market

As mentioned above, REN, CHK, SDRL, and several others in the oil and energy industry are seeing big gains today. After all, the news with regard to the balance of supply and demand in oil was overwhelmingly positive, and these companies are highly exposed to oil spot market prices. As a result, we’re seeing big gains today. Currently (12:51) REN, CHK, and SDRL are trading at $29.97, $6.58, and $2.68 per share respectively. This comes after respective gains in the amount of $0.46, $0.22, and $0.11 (1.56%, 3.45%, and 4.28%) so far today.

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What We Can Expect To See Moving Forward

While I would not have imagined I would be saying this even 2 months ago, I have a relatively bullish opinion of what we can expect to see from Resolute Energy, Chesapeake Energy, and Seadrill ahead. Like most others in their industry, these companies have been put through the ringer. However, with the idea that the world’s largest oil producers are actually serious about improving supply and demand comes a whole new world for these companies. Oil will likely continue heading up in value, and REN, CHK, Seadrill, and other oil and energy companies will see great benefits.

What Do You Think?

Where do you think REN, CHK, and SDRL are headed? Join the discussion at StockTwits, Twitter, Facebook, or Google+!

[Image Courtesy of Wikipedia]



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