Seadrill Ltd (NYSE: SDRL) is having an incredibly interesting day in the market today. The stock spiked dramatically early on, making it to gains of more than 20%. However, the stock has started to slide more recently, giving up a good amount of these gains, but still holding onto some impressive profits. So, what’s the deal? Why was the stock up so dramatically this morning before going on the decline? Today, we’ll talk about what’s propping the stock up, why it fell from highs, what we’re seeing from the stock at the moment, and what we’ll be watching for with regard to SDRL ahead.
Why SDRL Is Up In General
Seadrill is a company that’s focused in the industry of offshore oil. As a result, when the price of oil finds its way upward, the stock tends to follow suit thanks to the strong correlation between SDRL and oil. Well, recent news surrounding oil has been vastly positive.
Most recently, there has been the story of OPEC further extending production caps. Since the production caps have been in place, many experts have argued that OPEC simply wasn’t doing enough to bring balance to the oil industry. Nonetheless, OPEC argued that their moves would have a positive effect on the industry in time. While we may be getting to the end of the already agreed upon oil production caps, recent political changes in Saudi Arabia have led to renewed hopes that caps will be extended.
Recently, Saudi Arabian Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud, made some serious enemies with a political purge in the country. However, through this purge, he essentially gave more power to himself. This is a great thing for oil, as the Crown Prince is interested in maintaining production caps and bringing further balance to the oil industry. This, in combination with recent agreements to extend production cuts in Russia and other major producing regions, has led to gains in oil, which ultimately has propped up the value of SDRL.
Why SDRL Fell From Highs
Today started off as an incredible day, with Seadrill shares spiking by more than 20%. However, the stock has fallen off of highs recently, but why? Well, the answer is relatively simple. News with regard to the oil sector hit, and this time, it wasn’t good.
Investors cringed when the United States EIA reported crude oil inventories. According to the report, crude oil inventories climbed by 2.2 million barrels in the week ending November 2. This came as a surprise due to estimates that crude oil inventories would fall by 1.562 million barrels in the country. Considering that the driving factor in the price of oil is supply and demand, the added supply proved to be a cause for concern, causing the value of oil to slide. Ultimately, this led to some pain for SDRL, but didn’t take away all of the day’s gains.
Where SDRL Sits Right Now
While it would have been great to see Seadrill hold onto the gains seen early this morning, the stock still isn’t doing bad in the market today. Of course, our partners were the first to alert us to the gains in the stock. Currently (11:10), SDRL is trading at $0.44 per share after a gain of $0.03 per share (7.36%) thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping an incredibly close eye on SDRL. In particular, we’ll be watching for any updates associated with the oil industry as a whole as well as the company’s direct business operations. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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