Chesapeake Energy Corporation CHK Stock News

Chesapeake Energy Corporation (NYSE: CHK) is making a run for the top in the market this morning. While the company hasn’t issued any press releases or filed anything with the SEC, there’s good reason for the gains.

Continued talks of geopolitical tensions seem to be driving an opportunity in the stock. Moreover, there’s a lot to look forward to ahead. Here’s how I see it:

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Here’s Why CHK Stock Is Popping

As mentioned above, Chesapeake Energy stock is headed up in the market today on no news. Well, no company specific news. The reason for the gains seems to be geopolitical.

As we know OPEC has been working to prove that it still has the ability to balance oil markets when needed. As part of the flexing that the oil cartel has been doing as of late, Saudi Arabia’s new energy minister signaled that OPEC and its allies will continue with production cuts.

The signal comes ahead of a meeting scheduled for this week, when OPEC leaders and leaders of non-OPEC partners will discuss potential moves ahead. The meeting takes place in Au Dhabi later this week.

This is great news for CHK. As OPEC continues to work to balance oil markets, investors expect that prices of oil and natural gas will make their way for the top. With the company being centered in this space, gains in the values of these commodities will directly relate to stronger margins.

In other news, Trump and his trade war with China seems to be hitting the lime light, suggesting further tightening of supply and an increasing opportunity. At this point, we all know that Chinese ally, Iran is dealing with sanctions, drawing its oil from the market.

As the trade war continues to get worse, China is looking to assist its ally, giving it more of a financial foundation on which to stand on and the ability to hold out on Western demands.

In fact, China recently sent around 5,000 security personnel to Iran. The troops will guard about $280 billion worth of new investments from Beijing into the oil, gas and petrochemical sector of Iran. For Iran, this will offset sanctions in a big way, for China, it’s nations companies will get first right to refusal on new energy projects.

This is good for Iran and good for China, but when it comes to negotiations between Iran and the United States, it may tip the scale in Iran’s favor. So, what does that have to do with CHK?

The longer Iran can hold out with regard to sanctions, the longer oil from one of the world’s largest producers will be stripped from the market. This drastic loss in supply could lead to growth in the value of oil, once again, giving Chesapeake Energy investors something to look forward to.

The Bullish Argument Deepens

There’s an interesting argument starting to emerge, and I happen to agree. The argument is that on top of geopolitical unrest and supply restraints, there’s yet another reason to be excited here, and it has more to do with how investors use their money than anything else.

At the moment, it is arguable that renewables are very hot. A lot of the reason that renewables are getting so much attention is that there are tax credits that will fall off of the face of the earth in 2020. So, getting in now looks like an opportunity.

This has led to what many view as a large oversaturation of investors in the renewables space and a resulting overvaluation. At the same time, traditional oil and gas companies are being starved of these investment dollars, leading to large undervaluations.

As tax credits do drop off, energy investors may look to investments in traditional oil and gas companies like CHK, leading to a reversal of this trend. If this takes place, over the next year or so, we could see very strong growth in Chesapeake Energy’s stock price, among others.

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