Why Energy Stocks Core Laboratories, Occidental Petroleum, and SM Energy Jumped Today

Shares of small U.S. oil and gas company SM Energy (NYSE: SM) rose as much as 11% on Sept. 16. Fellow driller Occidental Petroleum (NYSE: OXY) were up roughly 10% at one point. Drilling services provider Core Laboratories (NYSE: CLB) also joined the energy sector uptick, rising around 9%. All three had given back some of their gains by 1 p.m. EDT, but were still holding on to high-single-digit advances.

Each of the sizable daily advances here is owed, in great part, to a notable rise in the price of oil today. But to attribute the entirety of the moves to this single factor would miss the bigger picture. Oil prices have fallen to painfully low levels in 2020 because of the dramatic reduction in demand that resulted from the economic shutdowns used to slow the spread of COVID-19. It was so bad that, at one point, oil fell below zero. Although economies around the world are opening up again and oil prices have risen well off the zero bound, they remain mired at a level that makes it difficult for exploration and production companies to turn a profit. That's partly because of weak demand and partly because excess supply earlier in the year has created an overhang of oil sitting in storage. This backdrop is vital to understanding the situations in which Core Labs, Occidental Petroleum, and SM Energy find themselves today.

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Source Fool.com