Why Centennial Resource Development, QEP Resources, and SM Energy Fell Sharply on June 15
Shares of U.S. exploration and production company Centennial Resource Development (NASDAQ: CDEV) fell as much as 14% in the first 15 minutes of the trading day on June 15. Following along were energy industry peers QEP Resources (NYSE: QEP) and SM Energy (NYSE: SM), down 14% and 12%, respectively, in early trading. Even Denbury Resources (NYSE: DNR) was down 12%, despite the fact that it has a vastly different business model than the other three names here.
The big story is a nearly 5% drop in the price of West Texas Intermediate (WTI) crude, which led investors to dump U.S. drillers. WTI is a key benchmark for U.S. oil drillers. The price decline isn't a particularly shocking development, since oil is a highly volatile commodity prone to swift price swings. This time around, the fear that COVID-19 is making a resurgence in states that have begun to reopen appears to be the leading cause behind investors' trepidation. Essentially, if states have to slow down the reopening process, or even backtrack on the progress that has already been made, energy demand will falter. That said, this isn't a U.S.-centric issue, as China has also been dealing with a resurgence of coronavirus cases. In other words, the world's top two economies might not be as strong as some investors hope, and that would obviously be bad for energy demand.
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Source Fool.com
