Chesapeake Energy Corporation (CHK) is a petroleum and natural gas exploration and production company that was founded in the year 1989 by Aubrey McClendon and Tom L. Ward. Chesapeake Energy is a company operating in the U.S with its head quarters in Oklahoma City, Oklahoma, United States.
Chesapeake Energy’s stock went up by 14% on Monday the 6th of June, after the trading closed on Friday. The stock is still going up in the morning trading session of Tuesday. This is said to have caused by a weaker dollar and Nigerian production shortages boosted oil prices.
West Texas Intermediate (WTI) crude is rose by 2.22% to $49.70 per barrel on the New York Mercantile Exchange, while Brent crude increased by 1.93% to $50.60 per barrel on the Intercontinental Exchange on Monday morning. In Nigeria, oil infrastructure is continually attacked, while a weaker dollar is fueling global demand. When the dollar falls, dollar-denominated commodities, such as oil, become cheaper for foreign investors.
Oil gains were capped though because the higher prices have led to a slight increase in domestic production, with U.S. energy companies putting nine oil rigs into production last week.
On the 23rd of May 2016, Chesapeake Energy Corporation had become the ultimate battleground stock over the last few months, with it up 70% during that period and many bulls seeing a lucrative recovery for the company and CHK stock. However, quite a lot of people considered Chesapeake Energy stock’s rally nothing more than a dead cat bounce, with Barclays saying that shares are worth no more than $1.
As at this time, shares of Chesapeake Energy were still down 75% over the last 12 months, and while oil prices were more than 50% off their 52-week lows. There were a lot of doubts as to whether the shares will surge higher or lower. Earlier in the year, on Thursday the 17th of March 2016, Chesapeake Energy stock gained 9.11% to $4.79 in late-afternoon trading, as a jump in oil prices benefits the oil and natural gas producer.
The surge in oil prices is being driven primarily by expectations that the supply glut will ease, rather than on a change in market fundamentals.
The dollar has weakened after the Federal Reserve kept interest rates unchanged yesterday while scaling back expectations for further rate hikes this year. A weaker dollar makes oil more affordable to foreign buyers, which can boost demand.
OPEC members and non members made an agreement to meet in Qatar on April 17 to discuss a production freeze.
“This is a rally based on hope of tightening supply and demand,” an analyst says. “The fundamentals aren’t driving the market. Expectations are driving the market.”
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Crude Oil was up 4.55% to $40.21 per barrel that afternoon and Brent crude climbed up 2.90% to $41.50 per barrel.
Chesapeake Energy has a generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical stock performance.