what happened
In recent times, fluctuations in energy reserves have become nervous. This week, stocks on the board – from oil and gas to clean energy – are doubling, recovering all their losses from last week, and then some.
As of 11 a.m. EDT Friday, here is how some of the major power groups gained some of the largest shares since last Friday’s close.
Renewable energy stocks;
Ballard Power Systems (NASDAQ: BLDP)10.5%.
Henovix (NASDAQ: ENVX)11.3%.
Pure energy fuels (NASDAQ: CLNE)20.3%.
Oil reserves;
Core Laboratories (NYSE: CLB)16.7%.
Century Wealth Development (NASDAQ: CDEV)23.5%.
Local Petroleum (NYSE: OXY): 16.8%.
so what
Good news for energy investors this week, with oil prices dominating the headlines.
As I write this, crude oil prices are heading for their biggest weekly gain in about 10 months. The West Texas Medium (WTI) is trading at $ 68.76 a barrel this morning, closing at 10.3% from last Friday.
Image source – Getty Images.
Two of the many macroeconomic factors that drive up oil prices stand out. First, China reported zero cases of coronavirus cases earlier this week, boosting hopes for a strong recovery in the country. The United States and China are the world’s largest oil producers.
Second, hurricanes are hurting key oil-producing regions in the Gulf of Mexico, forcing power companies to vacate their facilities. With fuel mains Phillips 66, Chevron, And Royal Dutch ll l With the dismissal of workers, there are fears that production at the gas station could decrease in the coming days. This has reached the heels of the Mexican state oil company, which has reduced production estimates following a fire at a beach resort. Mexico is a major supplier of oil to the Gulf of Aden.
Meanwhile, the weekly data from the Energy Information Administration shows that for the week ending August 20, oil reserves are below 6% of the five-year average. Increasing demand, depletion of stock, and declining production are the perfect recipes for raising oil prices.
OXY data by YCharts.
Not surprisingly, oil reserves have improved dramatically. Upper Basin Oil stocks, such as Occidental Petroleum and Centennial Resource, are particularly aware that oil prices are flowing directly downstream and are helping these companies strengthen their balance sheet.
Occidental Petroleum, for example, has a debt burden of nearly $ 3 billion in July alone due to strong cash flow in the second quarter. In the second quarter, Central Resources created a record cash flow to pay off its debt, which will not grow significantly until 2026.
Swelling of the chest also means that oil producers are better able to spend more on capital projects when the situation demands it. That high capital expense (and therefore the demand for products and services) directly improves the prospects for oil companies such as Core Labs, which grow from oil producers.
There is another energy group that will benefit from rising fuel prices – renewable energy companies. Low fuel prices typically erode competition for alternative energy sources, and vice versa. So as oil prices rise this week, net energy reserves are back on the radar of investors.
To raise optimism, the council this week drafted its $ 3.5 trillion infrastructure budget and set a deadline of September 27 to vote on the $ 1 trillion bilateral infrastructure bill that was approved by the Senate on September 27. The development last week provided investors with clean energy, including Ballard Power and renewable energy.
What now
In the coming weeks, it will be possible to launch a long-term investment in US infrastructure, including clean energy, which will benefit many stocks. In the meantime, as oil prices rise, oil-based oil reserves will make more money, and that should be reflected in their stock prices.
This article represents the author’s dissenting opinion on the “Official” Counseling Site of the Moteli Ful Premium Advisory Service. We are motili! Asking for an investment concept – even our own – helps us all think about investing and make decisions that will make us smarter, happier and richer.