Chesapeake Energy (CHK) Stock: Headed up with Production Cuts Around the Corner

Chesapeake Energy Corporation (NYSE: CHK)

Chesapeake Energy Corporation is off to yet another incredibly strong day in the market today. At the opening bell, the stock quickly found its way to the green. Since then, we’ve seen a continuation of modest upward movement, leading to a relatively strong day overall. Below, we’ll talk about what we’re seeing from the stock, why, and what to watch with regard to CHK ahead.

What We’re Seeing From CHK

As mentioned above, Chesapeake Energy Corporation is having a relatively strong day in the market today. This is following up on gains that we’ve seen on the stock recently. When the opening bell rang, the stock was already in the green. From there, we’ve seen a slow, yet steady, continuation of upward movement, resulting in relatively strong gains overall. At the moment (2:16), CHK is trading at $7.60 per share after a gain of $0.17 per share or 2.29% thus far today.

Why The Stock Is Gaining

If you’re following CHK, chances are that it’s not the only stock in the oil and energy industry that you’re interested in. At the end of the day, we all know that there’s quite a bit happening surrounding the industry as a whole. For those of you that haven’t been following, we’ve been seeing large production cuts. In fact, there are two of them that have been exciting investors lately.

  • OPEC – First and foremost, the long awaited OPEC agreement was finalized on November 30th. Under this agreement, OPEC member nations have agreed to cut daily oil production by 1.2 million barrels.
  • Non-OPEC – Also, several non-OPEC nations including Russia, Mexico and others have banded together to reduce production in their respective regions. This agreement cuts another 558,000 barrels from daily production around the world.

This news has been around for some time. However, the excitement is likely to grow throughout this week and next. That’s because, while these agreements were made weeks ago, they haven’t gone into effect. In fact, it isn’t until Sunday that they will. With these agreements going into effect so soon, investors are getting more and more excited.

What To Watch For Ahead

Moving forward, there’s no doubt in my mind that there are going to be some big opportunities surrounding Chesapeake Energy Corporation. However, there’s definitely some risk here too. At the end of the day, the oil production cuts are great. However, they haven’t even started and the price of oil has been inflated dramatically. The truth is that if you compare the global supply glut with the cuts, you’ll see that while 1.78 million barrels per day between the two agreements sounds like a massive number, but in the grand scheme of things, it’s actually relatively minimal. So, when the cuts do go into affect, start watching for supply and demand reports around the worlds as they will likely dictate movement in the value of oil and in companies like CHK as a result.

What Do You Think?

Where do you think CHK is headed moving forward? Join the discussion in the comments below!