Nordic American Tanker (NAT) Stock Keeps Going Up

Nordic American Tanker NAT Stock News

Nordic American Tanker Ltd (NYSE: NAT) is heading for the top in the market yet again, following up on the strong gains that we’ve seen from the stock as of late. In fact, in the last five trading sessions, the stock has climbed by more than 50%.

Interestingly, this run is leaving many investors scratching their heads. The truth of the matter is that the company hasn’t issued any material press releases or SEC filings that would lead to such a run. So, what’s the deal?

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NAT Stock Is A Beneficiary Of COVID-19

The COVID-19 pandemic is horrible no matter how you slice it, so I don’t want you to think that I’m glorifying the pandemic here. Nope, just stating the obvious. Here’s how COVID-19 has become a major catalyst for Nordic American Tanker:

As you know, the viral pandemic has led to a change to our way of life. No matter if you live in the United States, Europe or in various other areas around the world, you have seen the world as you know it flipped upside down. Once bustling streets in downtown areas have become ghost towns. Events around the world have been cancelled. Schools have shifted to online formats.

While this won’t last forever, it’s going on now, and for the oil sector, it’s very painful. Think about it, oil is a commodity that seems to be more at the mercy of supply and demand than any other on the market today. With everyone staying inside, demand for gas to run vehicles has fallen off of a cliff.

In fact, demand in oil has become so bad that in some cases, it can cost more to produce oil than you can sell it for. So, what does that have to do with NAT stock? we’ll get to that in a minute.

With oil prices being so low, selling it at the moment isn’t necessarily advantageous. So, producers and everyone along the commercialization line are looking to store oil until the market rebounds. That leads to a new problem. Storage facilities are filling up!

You can’t just throw oil in milk jugs and stack them in your back yard. With nowhere to put oil, companies are starting to get creative, and that’s where NAT comes in.

The company owns one of the largest fleets of oil tankers in the world. These ships hold vast amounts of oil, and are generally used to ship oil from one area of the world to another. However, with storage facilities filling up, oil tanker ships are starting to be used as storage facilities.

That’s great for Nordic American Tanker for multiple reasons. First and foremost, increased demand for its ships leads to an increase in the price that customers are willing to pay to use them. So, some companies will pay more to store oil than they will to ship it.

Another benefit of this is that ships that don’t move don’t require as much fuel themselves. Not to mention, the low cost of fuel greatly reduces expenses associated with keeping these vessels afloat so to speak.

The Bottom Line

The bottom line is that NAT is a company that’s in the perfect place at the right time. The company has plenty of room to store oil, and as oil prices fall, this storage space only becomes more valuable. As a result, the company is seeing strong demand, increasing revenues and reduced expenses. That’s enough to excite any investor about NAT stock.

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