Why Nordic American Tankers Stock Fell as Much as 10% on May 5
Shares of oil shipper Nordic American Tankers (NYSE: NAT) fell nearly 12% by around 10:30 a.m. on May 5 before gaining back some lost ground. By mid-afternoon, the stock was down in the high single-digits.
The Suezmax owner reported a doubling of the dividend over the previous quarter after the market closed on May 4, so the sell-off might seem out of place. But when looked at within the larger oil market environment, the dividend hike actually helps explain why investors might be concerned.
Nordic American Tankers's fleet of around 20 ships normally ferries oil around the world. However, the global effort to slow the spread of COVID-19, which essentially shuttered economies across the planet, has led to a swift and material drop in demand. Oil supply was already fairly high, so the energy industry has quickly found itself in a severe oversupply situation. The extra oil has filled most available storage, leading industry participants to call on Suezmax ships to jump in and become seaborne storage containers.
Source Fool.com
