Chesapeake Energy Corporation CHK Stock News

Chesapeake Energy Corporation (NYSE: CHK) is climbing in the market early on, with gains of more than 5%. However, with no news issued by the company, many are scratching their heads, wondering just what’s going on.

Ultimately, the stock seems to be following the price of oil for the top as US inventories fall and geopolitical concerns provide further support for price growth in the commodity. Here’s what’s going on:

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CHK Stock Benefits From US Crude Stockpile Decline

Chesapeake Energy is a company that makes its money through the production and sale of oil and natural gas. So, when the prices of these commodities find their way upward, the price of the stock tends to follow. That seems to be exactly what we’re seeing from the stock today.

One of the big factors driving gains in oil, and therefore gains in CHK, is the fact that crude oil inventories in the United States fell at a faster rate than expected. The larger than expected decline in inventories was partly the result of an outage at a major refinery on the United States East Coast.

Also, after a massive fire led to substantial damage at a Philadelphia Energy Solutions complex, the company is now considering shutting down its oil refinery for good. As a result of the fire, the company has already declared force majeure on some gasoline supplies, leading to gasoline futures hitting their highest levels since may.

Also helping to prop the value of CHK stock is the fact that U.S. crude oil stockpiles fell by more than 7.5 million barrels in the week ended June 21. As of the end of the week, crude stockpiles were at 474.5 million. Analysts expected a decline of 2.5 million barrels. Of course, the law of supply and demand tells us that when supply falls, prices rise.

Geopolitical Concerns Are Also Propping Up Prices

Another story that seems to be helping Chesapeake Energy and the value of oil to climb has to do with geopolitical news. Iran and the United States are in a dispute about sanctions, and that dispute is heating up.

In fact, on Tuesday, President Trump said that any attack that Iran may carrout on anything American would result in the “obliteration” of certain areas in Iran. This leads to more uncertainty surrounding the supply of oil as Iran is one of the world’s largest producers.

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Final Thoughts

At the end of the day, CHK seems to be in the right place at the right time. With crude oil inventories falling in the United States and geopolitical concerns leading to further supply-side uncertainty, the value of oil is climbing, creating an opportunity for expanding revenue for the company.

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