VET - Why Vermilion Energy Stock Soared as Much as 15% Today
Shares of Vermilion Energy (NYSE: VET), a globally diversified Canadian energy company, rocketed higher by 15% as of noon today. Unfortunately, the stock remains sharply lower for the year, having fallen roughly 75% from its January highs. That share price decline, not surprisingly, was driven by sharply lower oil prices. The big gain today was driven by rising oil prices.
Global oil prices have been incredibly volatile in 2020, pushing the shares of drillers dramatically higher and lower on a day-to-day basis. The big picture here is that growing U.S. production over the past decade or so has upended the historical supply-and-demand dynamics in the oil market. Although OPEC had been cutting production to deal with the issue, OPEC and Russia had a falling-out over this approach and effectively got into a price war, adding even more supply to the market. Then, efforts to contain COVID-19, notably through the closure of economies around the world, led to a rapid and dramatic decline in demand.
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