Chesapeake Energy Corporation is being considered as an energy company which has faced some major lows in the past year which seems to be forming crease between the eyebrows of the investors on bigger levels now. The oil digging company has not been showing much activity on the stock lately but analysts believe that despite the huge number of losses that it has made in the past few months, there might be a ray of sunshine looking out for the giant in the start of the new year. Analysts are of the opinion that investors in any company are always looking at the accumulative results that a company shows by the end of the year, which means that the same is being expected for the investors in the oil company now.
Chesapeake stock has failed to sustain itself in the oil market for long and that is majorly due to the rise and fall of the oil prices in the international forum, which has made the company lose stock value by 75% in the same year only. This fall of the share and stock price is not something to be ignored, as it has turned things around in the worst possible ways for the oil field services provider. Analysts in the energy industry think that once the fiscal year ends for the company, the giant might turn out to show some much needed strengths which it has been holding back previously.
Before the year ends on December 31, it is a common practice for investors to shed off their load in the stock market and to get rid of all the stocks that show no positive future in the industry. By that time comes, analysts believe that it will prove to be a turning point for Chesapeake shares as it could go either in the positive direction or in the negative one, something that only time will tell.
This effect on the stock of the oil giant has been named as the January Effect, which will determine how the next year is going to be for the energy company. The share price that was traded off in the start of the year by the oil company was $21. However, it is not trading its shares on a share price of $5, which is indeed a sad state for the stock of the oil diggers to be in. Depending on the January Effect, analysts are expecting some positivity to hit the stocks despite bearishness.
Saudis planning oil production boost for additional Indian supply, while IEA report claims a rise in demands due to low prices.
United States Oil Fund (NYSEARCA:USO) has seen its stock price drop by less than 1% before Friday’s opening bell after the Saudis have reported increasing oil production to boost supply to Indian refiners. A further rise in the supply will exacerbate the already oversupplied market and will likely push down oil prices further.According to Reuters, if demand for refined products dipped due to the oversupply, then it will spill in the entire crude market, which would depress crude prices even further, due to the ongoing maintenance program by some refiners gearing up for the hot summer season, witnessing temperatures rise a bit above average.The US dollar also played a role by trading higher than the euro due to news emerging from the Eurozone that all is not entirely well between the EU and Greece from the ongoing debt talks, and the IMF has thrown cold water over the prospects of success from the talks.However, the International Energy Agency (IEA) has reported that there has been an uptick in global demand for energy, due to the low oil prices that has helped to boost fuel use, mostly from Americans, who are now starting to hit the roads with the summer season on the horizon and ahead of July 4 celebrations. With temperatures in the Middle East nearing the mid 40’s and 50’s, expect a lot of oils to start being gobbled up by the Gulf States alone.As stated by the agency, demand has grown by an additional 280,000 barrels per day (bpd) to 1.40 million bpd this month, bringing the total monthly demand as of now to almost 94 million bpd. It seems that OPEC’s decision to maintain current output levels has paid off though they did not bet that there will be a rise in demand as reported by the IEA.Further, the IEA has reported that supply from OPEC has risen to 31.33 million bpd in May, which is the highest since August 2012 (which is likely to remain that way for the coming few months at the end of summer), whereas non-OPEC production has risen to almost a million bpd, citing fear of maintenance shutdowns. It seems that cut down in capital spending is taking a time to be visible in the reduction in non-OPEC supply, as well as the slow rise in prices. The global production is still going strong. Benchmark crude is currently trading at $65.75 per barrel as of yesterday.
