Why Core Laboratories shares jumped 7.1% today
Stocks of an oil and gas service company Main laboratories (NYSE: CLB) surged up to 7.1% in trade on Wednesday as oil prices soared. But the oil reserve fell late in the day and closed just 1.2%.
Crude oil prices rose sharply early in Wednesday, as West Texas Intermediate (WTI) prices rose 6.2% to $ 61.34 per barrel. As of 4 p.m. EDT, WTI is still up 5.2% for the day.
While the price of oil does not have a direct impact on Core Labs’ business, it is a significant factor in the number of exploration companies, which ultimately route business to Core Labs. So when prices rise, the outlook for the oil industry also improves. At least, that’s what the short-term price action in the stock may indicate.
The reality on the ground is that oil and gas exploration is going to be more difficult financially for companies in the years to come. Oil and gas inventories have generally been declining in recent years and investment is pouring into renewables instead of fossil fuels. Even if commodity prices rise in the short term, this lack of funding will make it difficult for explorers to grow long term, which may explain why stocks pulled back to end the day.
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