Transocean (RIG) Stock: Gaining As US Rig Count Declines

Transocean LTD (NYSE: RIG) is making a run for the top in the market this morning, and for good reason. While the company hasn’t issued any news of its own, news with regard to the United States rig count is leading to excitement. Today, we’ll talk about:

  • The rig count news;
  • what we’re seeing from RIG stock as a result; and
  • what we’ll be watching for ahead.

RIG Stock Gains As US Rig Count Declines

As mentioned above Transocean, the largest oil rig company in the United States, is having a great day in the market today. However, the company hasn’t issued any news. So, what’s the deal?

It all has to do with declining rig counts in the United States. Recent reports show that rigs engaged in the exploration and production of oil and natural gas in the United States came to a total of 1006 for the week ending March 29, 2019. That figure is down from 1016 the week before.

The 8 rig decline marks the sixth consecutive week that we saw declines in rig counts in the United States. Although the current rig count is hgiher than the prior year’s total, the decline is great for RIG stock.

The reason that this is positive news revolves around the concept of supply and demand. Ultimately, with less rigs being opporational, supply of oil and natural gas will likely decline, ultimately leading to gains in the prices of these commodities. Since RIG makes its money through these commodities, anything that increases prices is ultimately going to provide further value for investors.

What We’re Seeing From The Stock 

One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to Transocean, the news proved to be overwhelmingly positive.

After all, reducing rig counts means that froma  supply and demand perspective, the price of the company’s core products will increase. So, it’s not surprising to see that excited investors are pushing the stock on a run for the top.

As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:56), RIG is trading at $9.20 per share after a gain of $0.49 per share or 5.69% 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 RIG. In particular, we’re interested in following the story surrounding the company’s continued work to provide value for investors. Should oil continue to rise, this work will likely pay off in a big way. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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