Stone Energy (SGY) Stock: Can This Run Continue?

Stone Energy Corporation (NYSE: SGY)

Stone Energy Corporation is having yet another incredible day in the market today. This is following up on gains that we’ve seen on this stock and many others in the energy sector as of late. However, can these gains last? Today, we’ll talk about why SGY is up, what we’re seeing today, and whether or not this run is likely to last.

Why SSGY Is Up

As mentioned above, Stone Energy isn’t the only stock in the energy sector that has been soaring lately. In fact, it is only one of many. The reason for the sector-wide gains is relatively simple. It all has to do with news associated with oil supplies. After all, oil is at the mercy of supply and demand and energy companies are at the mercy of oil. Here are the two big stories surrounding oil at the moment…

  • OPEC Finalizes Output Cut Agreement – A few weeks ago, on November 30th, OPEC announced that it had finally reached an agreement that would allow it to cut the production of oil. Under this agreement, OPEC member nations will be reducing oil production by a combined 1.2 million barrels per day. That’s a massive amount of oil that will no longer be produced, sending oil’s value up and helping SGY and others.
  • Non-OPEC Output Cut Agreement – Shortly after OPEC announced that it would be reducing oil production internally, we heard more good news. This time, many non-OPEC nations had banded together and cone up with an agreement of their own. This time, Russia, Mexico and others had agreed to cut the production of oil. Under this agreement, a combined 558,000 barrels of oil were cut from daily production.

Between the two large production cuts, oil has been running upward. As a result, investors are reacting, throwing their money at any company that makes money from oil. Since SGY is one of these companies, the stock is enjoying the gains!

What We’re Seeing From The Stock Today

As mentioned above, Stone Energy Corporation is seeing a continuation of recent gains in the market today. As soon as the market opened, the stock quickly found itself in the green. From there, we’ve seen more and more upward movement. At the moment (12:50), SGY is trading at $11.57 per share after a gain of $1.40 per share or 13.77% thus far today.

Will The Gains Last?

That’s the million dollar question my friends, and I wish I could answer it. However, I can’t tell the future. The truth is that things are looking great right now, but when it comes to the market, anything can change on the drop of a dime. In this case, there are some concerns. The truth is that the oil supply glut is far larger than the cuts. While 1.758 million barrels per day seems like quite a bit, the world will still be producing far more oil than it uses. On top of that, there are several questions as to whether or not these deals will withstand the test of time. If anything changes, we could see a sharp reversal in SGY and others in the oil and energy industry.

What Do You Think?

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