Oil stocks couldn’t be hotter right now. Shares of oil producers are rocketing in the wake of strapped supply and vastly increasing demand. One company that’s been benefiting from the trend is Enservco (NYSEAMERICAN:ENSV). ENSV stock is shooting up in value today, and it’s getting help in large part from news coming out of the White House. President Joe Biden’s announcement means business for U.S. oil production.
Indeed, the demand for oil is reaching unprecedented heights. The price per barrel of oil is well above $100 for the first time in nearly a decade; as of this week, prices are topping $130 a barrel. There are two large factors driving this price surge. The first of these is an increased demand for oil in the aftermath of the coronavirus pandemic. The reopening of businesses is to blame for the broader thirst for fuel. In the wake of this development, overall supply of oil is already being stressed. And yet, there’s a much larger catalyst for this price surge that’s unfolding currently.
The second and much more significant event driving demand for oil is Russia’s invasion of Ukraine. The militarized dispute between the two nations has a rich history, dating back to 2008. Of course, things are becoming much more heated in recent weeks with the invasion, which itself prompted swift sanctioning by the U.S. and a number of other global powers. One aspect of the sanctions involved many European nations cutting ties with Russia’s hugely influential oil and fuel corporations; Russia accounts for 8% of the global oil supply, and about one-third of fuel exports to other European nations.
Enservco’s ENSV Stock Soars as Investors Anticipate U.S. Oil Production Ramping Up
Atop all of these threads weaving together and pushing oil demand sky-high, the U.S. is also announcing today its plans to completely cut Russian oil imports out of the equation. Given Russia’s huge influence in the industry, there is some turmoil to be expected. Enservco fits perfectly into the plan to combat the tumult this ban will cause. As a result, investors are seeing a massive upswing in ENSV stock prices.
Enservco isn’t exactly an all-star in the oil industry; its market capitalization of just $58 million is dwarfed by larger oil players. And yet, as news of the U.S.’s Russian oil ban surfaces, the stock is on a tear.
This is largely due to Enservco’s role within the oil industry, and its role in helping combat oil price volatility in the U.S. Enservco is a provider of oil well-site services for domestic drillers. The company assists drillers and oil producers in the U.S. to streamline their production processes. Naturally, as the U.S. bans Russian oil, increasing domestic production will be a key step in making sure the country isn’t hit by its own sanction. Enservco, then, stands to gain hugely.
And gain it has. ENSV stock is roaring in the wake of Biden’s official announcement. As of this writing, the stock is up over 100%, with shares pricing in at around $4.70. Demand is surging as well, with over 81 million shares trading hands against a average of 1.9 million.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
