Small Shale Stocks Lead Energy Rally Post OPEC Extension



Small Shale Stocks Lead Energy Rally Post OPEC Extension
Small shale producers and offshore drillers are among stocks soaring after the wider OPEC+ group agreed to extend output curbs.

(Bloomberg) -- Small shale producers and offshore drillers are among stocks soaring after the wider OPEC+ group agreed over the weekend to extend its record output curbs.

Saudi Arabia also increased prices for some crude exports by the most in at least two decades.

Stock gainers include Chesapeake Energy Corp., Denbury Resources Inc, Tellurian Inc., California Resources Crop., Oasis Petroleum Inc. and Callon Petroleum Co., all rising over 40%. Offshore driller Noble Corp. rose over 100%. Short interest is about 17% of free float, according to data compiled by Markit.

Canada’s beaten-down energy stocks also extended their gains Monday, with the likes of ShawCor LTD and Baytex Energy Corp. both rising over 100% during the last five sessions.

Still, oil extended losses after Saudi Arabia said it wouldn’t continue its additional, deeper output curbs after June, and Libya said it would resume exports from its largest fields.

“The extension was expected and anticlimactic,” Piper Sandler analyst Bill Herbert told clients in a note. “The complexity factor associated with oil continues to be exceedingly elevated,” he added.

Goldman Sachs thinks oil has already more than priced in an OPEC+ agreement to extend supply cuts through July, with prices nearing levels that could prove self-defeating to the market rebalancing.

To contact the reporter on this story:
Michael Bellusci in Toronto at mbellusci2@bloomberg.net

To contact the editors responsible for this story:
Courtney Dentch at cdentch1@bloomberg.net
Kristine Owram, Steven Fromm



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Rudolf Huber  |  June 09, 2020
Memories are short. Weeks ago, shale was supposed to be dead. Now they are back - the oil business is still longer-term business than donut toppings are. The flavor of the day is meaningless. OPEC+ must have higher prices to stage some sort of comeback. But as soon as they do that, they sprinkle steroids on shale. Catch 22.