Chesapeake Energy Corporation (NYSE: CHK)
Chesapeake Energy is having a strong day in the market today, and for good reason. At the moment, the world’s largest oil producers are in the midst of a meeting that could dictate where the stock is headed next. Today, we’ll talk about that meeting, why investors are so excited, what we’re seeing from the stock today, and what I’m expecting to see from CHK moving forward.
Today’s Closed-Door Oil Meeting Will Lead To Big Movement In CHK
As we all know, Chesapeake Energy is a company that is focused on exploration and production of petroleum and natural gas. As a result, the company is largely exposed to spot market prices with regard to oil. Unfortunately, this hasn’t been good news as of late.
Unfortunately for CHK and other companies in the industry, the price of oil has been sitting at crisis levels for quite some time. However, that may change. Since Monday, the world’s leading oil producers have been meeting in an attempt to reach an agreement to cap, freeze, or reduce the global production of oil. Of course, if an agreement is met, it will help to solve the supply glut problem, leading to big gains in the price of oil. Naturally, that would lead to big gains in the value of CHK as well.
Why Investors Are So Optimistic
The world’s leading oil producers have met several times in the past. Unfortunately, each time they met we saw geopolitical disagreements separate the sides, leading to no deal. So, what is it about this particular meeting that has Chesapeake Energy investors so excited? Well, there are two things…
- The Need For A Deal – First and foremost, oil is a key commodity that’s used around the world. It also is the driving force when it comes to economic conditions in several countries. Because the price of oil has been so low for so long, economic conditions are dwindling. Some of the world’s largest oil producers need to reach an agreement in order to stimulate their struggling economies.
- Comments From Leaders – Another factor that CHK seems to be holding onto is commonets from leaders in the industry. For example, the oil minister of Qatar as well as President of Venezuela both said that a deal is necessary and may be just around the corner.
What We’re Seeing From The Stock Today
As we know, the news moves the market. At the moment, the main stream media seems to be parsing the news in a positive way for oil, and that’s naturally a good thing for CHK. As a result, we’re seeing gains in the value of the stock today. Currently (2:01), the stock is trading at $6.42 per share after a gain of $0.19 per share or 3.05% thus far today.
What I’m Expecting To See
Moving forward, I have a relatively bearish opinion with regard to Chesapeake Energy. While I would love to say that I’m expecting for a deal to be made, that’s simply not the case. So far, we already know that Iran turned down Saudi Arabia’s first offer. Geopolitical unrest between these two countries has been the reason for no deal in the past, and will likely be the reason for no deal today. Unfortunately, that means that CHK is likely headed for declines.
What Do You Think?
Where do you think CHK is headed moving forward? Join the discussion in the comments below!