Chesapeake Energy Corporation CHK Stock News

Chesapeake Energy Corporation (NYSE: CHK) has seen strength as of late, and that strength is continuing with gains of nearly 5% as we near mid-day today. The gains are largely the result of recent strength in oil, mixed with the reduction of debt on the company’s balance sheet. Here’s what’s going on:

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CHK Benefits From Gains In Oil

Chesapeake Energy is focused on the production of oil and natural gas. So naturally, when the values of these commodities climb, the stock climbs as the company’s potential to earn from its products rises.

That seems to be exactly what we’ve seen from CHK as of late, and the gains are continuing. Likely helping to prop the value of the stock up this morning is news from OPEC.

Based on recent reports, OPEC, the world’s leading oil cartel, has agreed to extend the current production cut agreement for the remainder of 2019. Moreover, Russia and Iran have agreed on the need to curb output in order to boost prices alongside weakening demand.

This is great news for CHK as any boost in oil prices could directly lead to growing revenue and margins. Moreover, according to the CME’s OPEC Meeting OUtcome Probability tool, there is about a 92% chance that OPEC will deepen its output cut, leading to more support for the value of oil.

Another story that could be helping to prop up the value of oil, and therefore, Chesapeake Energy has to do with Iran braking a pact. According to various reports, the country has exceeded a key limit with regard to the amount of nuclear fuel that it can posess under the 2015 international pact that was designed to curb the country’s nuclear program.

Iran has openly declared that it will no longer respect an agreement that was abandoned by President Trump about a year ago.

With Iran being one of the world’s largest oil producers, this is leading to concerns that their oil will be cut from the market. After all, as Iran works to restore its nuclear weapons capacity, the country is blatantly threatening the United States, and even recently shot down a US drone.

The hightened geopolitical unrest between the United States and Iran could lead to further sanctions, causing Iran’s oil to be largely cut from the global supply and demand equation and leading to further strength in the value of the commodity. Of course, this would be great for CHK and its peers.

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