OXY - Why Kosmos Energy Callon Petroleum Occidental Petroleum and Patterson-UTI Energy All Rallied Strongly Today
Shares of small offshore oil driller Kosmos Energy (NYSE: KOS) rose as much as 17% in early trading on Nov. 23. Relatively tiny U.S. onshore exploration and production (E&P) company Callon Petroleum (NYSE: CPE) was up around 18%. Large and heavily indebted energy sector player Occidental Petroleum (NYSE: OXY) reached a peak a little shy of 13%. And energy services company Patterson-UTI Energy (NASDAQ: PTEN) advanced just about 12%. The impetus for all of this was rising oil prices, but the dynamics in the energy sector today aren't really that simple.
Oil and natural gas supply and demand dynamics were slightly out of balance before 2020 began, thanks to a decade-long increase in U.S. energy production. OPEC had been reducing its production to offset the increase, but it wasn't enough to keep prices from remaining relatively weak. And then, in early 2020, the coronavirus pandemic emerged. The economic shutdowns being used to slow its spread have resulted in a massive drop in demand. With supply already a bit high and demand falling off a cliff, oil prices plummeted. At one point in early 2020 key U.S. oil benchmark West Texas Intermediate briefly fell below zero . Although prices have recovered somewhat, that event shows just how deeply out of balance supply and demand are today.
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Why Kosmos Energy, Callon Petroleum, Occidental Petroleum, and Patterson-UTI Energy All Rallied Strongly Today