Why Core Laboratories, SM Energy, and Kosmos Energy Rallied as Much as 12% Today
Shares of onshore U.S. exploration and production (E&P) company SM Energy (NYSE: SM) jumped just shy of 13% in early trading on Dec. 10. Following close behind was offshore driller Kosmos Energy (NYSE: KOS), which rose as much as 10.5% in the first hour or so on Wall Street. Energy services provider Core Laboratories (NYSE: CLB) advanced nearly 6.5%, tagging along for the ride, too, but to a lesser extent. The big story today was a rise in commodity prices, but there's so much more to the story than that when you look at the big picture.
The energy sector has been a deep funk this year. It entered 2020 with supply slightly exceeding demand. Then the economic shutdowns being used to slow the spread of the coronavirus led to a massive decline in demand and drastically exacerbated the supply-demand imbalance. Energy prices declined, as you would expect. At one point key U.S. benchmark West Texas Intermediate crude fell below zero. There were some technical reasons for that drop, and it didn't last long, but the event shows just how badly out of balance the energy sector has been this year.
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Source Fool.com