Resolute Energy Corp (NYSE: REN)
Resolute Energy has had an incredible run in the market as of late, and to be honest, these kind of gains weren’t earned in the first place. Nonetheless, with news released surrounding the price of oil today, the stock is looking even more concerning than it already had been. Today, we’ll talk about the news that was released, what we saw from the stock today, and what we can expect to see from REN moving forward. So, let’s get right to it…
REN Likely To Fall After Today’s Oil News
Today was an overwhelmingly bad day for the oil and energy market as a whole; Resolute Energy was not immune. The reason for the losses across the board had to do with the demand for oil. Early this morning, the IEA released data with regard to demand for oil.
In the report, we learned that during the third quarter, the IEA is expecting that demand for crude oil will fall to 800,000 barrels per day. That’s a big drop. In fact, on a year over year basis, that’s a drop of 1.5 million barrels per day in demand for oil.
The IEA explained that the declines in demand for oil had quite a bit to do with the fact that growth in demand has all but dissipated in the developed economies. In key developing and Asian powerhouse economies, demand is slowing to a crawl. Unfortunately, none of this is good for REN.
More Bad News For Oil
The IEA report, unfortunately, was not the only negative report we’ve seen surrounding oil either. As a matter of fact, OPEC released a report of their own on Monday. In their report, a revision was made for non-OPEC supply to go upward by 180,000 barrels per day in the year 2017. This shows that the supply side is also concerning; yet another hit to REN. In a statement about the reports, Oliver Jakob, a member of Switzerland’s Petromatrix had the following to offer…
“The two reports are going in the same direction, but from slightly different angles… IEA have been bearish on demand and OPEC on non-OPEC supply, but whichever way you look at this it means that the markets are going to take longer to balance than many predicted at the start of this year.”
What We Saw In The Market Today
Today was an exceptionally bad day for the energy market as a whole. Unfortunately Resolute Energy felt the heat as well. Currently (4:02), the stock is trading at $22.38 per share after a loss of $0.28 per share or 1.24% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bearish opinion of what we can expect to see from REN. The truth is that I have had this opinion for quite some time. At the end of the day, the company is operating at a net loss quarter after quarter and has a massive amount of debt. The only thing that can dig the company out of this current rut is a higher oil price, and that’s not likely to happen any time soon. At the moment, REN is trading well above analyst price targets on investor excitement. However, I’m expecting for that excitement to soon fade, leading to declines.
What Do You Think?
Where do you think REN is headed moving forward? Join the discussion in the comments below!