Rex Energy (REX) Stock: Why The Declines Aren't Concerning

Rex Energy Corporation (NASDAQ: REXX)

Rex Energy has been a fun stock to watch as of late to say the least. For the most part, we’ve seen incredible gains. However, today, the stock is falling. Nonetheless, I’m not concerned and you shouldn’t be either. Below, we’ll talk about what we’re seeing from REXX, why I’m not concerned, and what investors should be watching for ahead.

What We’re Seeing From REXX

As mentioned above, Rex Energy isn’t having the best of days in the market today. Unfortunately, when the opening bell sounded, the stock quickly started finding its way downward. Throughout the morning, we’ve seen more of the same. Currently (11:42), REXX is trading at $0.49 per share after a gain of $0.06 per share or 11.52% thus far today.

Why I’m Not Concerned About Declines

In general, if I see a stock that’s down more than 5% I get concerned. So, it’s rare to see something like REXX. The stock is down over 11% and really, I’m expecting gains. So, why do I hold such a bullish opinion? The answer is simple.

Months ago, OPEC, the world’s leading oil cartel announced to the world that it had reached an agreement to reduce the production of oil. Of course, if production was reduced, Rex Energy would likely benefit from higher prices associated with its flagship product, oil. However, many, including myself were skeptical. At the end of the day, OPEC members really hadn’t agreed to anything except for the fact that they would agree to cut production by no later than November 30th.

Nonetheless, when November 30th rolled around, many, including myself, were shocked to find that OPEC had indeed reached an agreement, and it was bigger than originally planned. In fact, the oil cartel finalized an agreement that would cut around 1.2 million barrels of oil per day from daily production. Of course, this is incredible news for REXX and others in the oil and energy sector, but that’s not where the news ends.

Yesterday, more news broke with regard to global oil production cuts in an attempt to increase the price of the commodity. That news was that non-OPEC member nations were getting involved in the cuts. In fact, a group of countries including Russia has agreed to cut production by a combined 550,000 barrels per day. Once again, as the law of supply and demand tells us, this is great for REXX and others in the industry.

What To Watch Ahead

In the short run, Rex Energy and other stocks that are correcting today in the sector are likely to see further gains once this correction is over. Nonetheless, in the future, things are still up in the air. At the end of the day, between OPEC and non-OPEC nations, we’re looking at a production cut of around 1.75 million barrels of oil per day. However, many experts are pointing to the fact that the glut is still far larger than the cut. So, it’s going to be incredibly important to keep a close eye on supply and demand data for a signal of where REXX and others in the sector are headed next.

What Do You Think?

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