Chesapeake Energy Corporation CHK Stock News

Chesapeake Energy Corporation (NYSE: CHK) is making a run for the top in the market this morning. Currently, the stock is trading on gains of more than 6%. With no news issued via press release or SEC filing, many are wondering why.

The gains seem to be tied to recent news surrounding oil, the commodity that CHK is essentially built around. Here’s what’s going on:

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CHK Stock Gains As Oil Gets A Boost

Manny suggested that the escalating trade war between the United States and China would lead to economic recession and weakening demand for oil. However, Chesapeak Energy and others in the energy industry are seeing gains today as investors look past trade war concerns and bid up prices on tightening inventories.

Recently, data from the EIA showed that crude oil stockpiles fell by 10 million barrels last week. That massive decline was far more than analysts and investors expected to see.

Interestingly, all signals are showing reductions in supply, unlike previous reports. There was a 2.1 million barrel drop in gasoline inventories and distillate fuel stocks saw a dramatic decline as well.

While this may lead to higher prices at the pump, it also is a great thing for CHK, its investors, and others in the energy industry. The truth of the matter is that EIA numbers are showing that oil is balancing and benefiting from seasonal demand acceleration.

As this takes place the price of oil and gas are likely to continue upward. Of course, as a company that focuses on the production of these commodities, CHK will benefit from the ability to generate larger revenues from its production.

What To Watch Moving Forward

Due to Chesapeake Energy’s dealings in the oil and gas industry, and gains in oil, the stock is looking great right now. However, as we know, anything can happen. There are a few factors to watch ahead here:

  • EIA – The EIA provides oil inventory data on a weekly basis. Keep a close eye on this data. As oil stockpiles continue to fall, the value of the commodity will likely climb, leading to a correlated gain in the value of CHK stock. However, if we have any unexpected gains in oil stockpiles, we could see the opposite.
  • Demand – As mentioned above, seasonal demand seems to be on track, supporting growth in the value of oil. Keep an eye on this demand as a continuation of strong demand could lead to further support for growth.
  • Trade War – Finally, we have to throw a little uncertainty in here. Investors are looking past the trade war between the United States and China at the moment, but ignoring it for too long could be a mistake. The war is having a profoundly negative impact on economies in the United States, China and around the world. Should it continue to escalate, it could push the world into recession territory. When this happens, one of the first sectors to take a hit is energy, putting CHK and others in the crosshairs of a dangerous situation should we not see resolution of the Trade War in a reasonable amount of time.

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