Today is proving to be a great day for oil-related stocks like Rex Energy, Triangle Petroleum, and Seadrill. The gains today are happening for good reason. Yesterday, OPEC announced that it has reached an agreement to reduce production. Of course, this will even out supply and demand, to an extent anyway. As a result, we’re seeing big gains in oil-related stocks. Today, we’ll talk about the OPEC agreement, what we’re seeing from REXX, TPLM, and SDRL, and what we can expect to see from these stocks moving forward.
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OPEC Reaches Agreement Sending REXX, TPLM, And SDRL Skyward
As mentioned above, Rex Energy, Triangle Petroleum, Seadrill, and others in the industry are having a great day in the market today. The gains we’re seeing on oil-related stocks are the result of OPEC finally reaching an agreement to reduce oil production.
According to the agreement, OPEC will be limiting production to a range between 32.5 million and 33 million barrels of oil per day. At the moment, the world’s largest oil producers are pumping out 33.24 million barrels of oil per day. Of course, as the law of supply and demand tells us, when supply falls, the price of the commodity must increase. Considering that REXX, TPLM, and SDRL are all heavily exposed to oil spot market prices, this is incredible news for these stocks.
What We’re Seeing In The Market As A Result
As investors, one of the first things that we learn is that the news moves the market. The news we received with regard to OPEC was overwhelmingly positive. As a result, we saw incredibly strong gains in REXX, TPLM, and SDRL yesterday, and the gains are continuing today. Here’s what we’re seeing:
- Rex Energy Corporation – REXX is today’s biggest gainer in oil. Currently (11:53), the stock is trading at $0.63 per share after a gain of $0.09 per share (16.25%) thus far today.
- Triangle Petroleum Corporation – TPLM is also seeing strong gains in the market today. Currently (11:52), the stock is trading at $0.30 per share after a gain of $0.02 per share (8.50%) thus far today.
- Seadrill Ltd – Finally, SDRL is also seeing strong gains in the market today. Currently (12:09), the stock is trading at $2.46 per share after a gain of $0.16 per share (6.81%) thus far today.
What I’m Expecting To See Moving Forward
Moving forward, I have a relatively mixed opinion with regard to what I’m expecting to see from Rex Energy, Triangle Petroleum, and Seadrill. In the short term, all three of these stocks are likely to continue upward. At the end of the day, the news of the OPEC agreement is overwhelmingly positive.
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However, in the long run, I still have my reservations. At the end of the day, there are still several questions with regard to the agreement. First and foremost, we don’t even know which OPEC countries will produce what amounts of oil. On top of that, while any decline in supply is positive, even with the cut, production is still far exceeding demand. So, while the fact that an agreement shows willingness to do something, I’m not sure that it will be enough to boost oil for the long run. As a result, I believe that the long-term view on REXX, TPLM, and SDRL still includes a relatively high level of risk.
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