Why Is Imperial Petroleum (IMPP) Stock Up Today?

Most energy-related stocks are having their day in the sun on Monday. For investors in Imperial Petroleum (NASDAQ:IMPP), this is certainly the case. IMPP stock has more than doubled, rocketing 125% higher at the time of writing on impressive volume.

Black oil barrel that reads "oil" on the side in a pool of oil with other barrels
Source: Shutterstock

This move comes as oil prices surge to new highs not seen since 2o08. From a macroeconomic perspective, there’s certainly a lot to like about stocks in the energy sector right now. For companies like Imperial Petroleum with market capitalizations in the micro-cap category, perhaps even more so. After today’s move, Imperial Petroleum’s market capitalization still sits at around $35 million. Accordingly, investors seeking highly volatile trading vehicles to play this rally in energy prices certainly have a decent option with IMPP stock.

That said, there do appear to be other key drivers investors are watching with IMPP stock. Let’s dive in to see what those are.

What’s Behind Today’s Rally in IMPP Stock?

Imperial Petroleum is a company with a unique business model. It provides seaborne transportation services to a range of energy clients. These include refineries, producers and traders. Accordingly, demand for its business has been surging lately.

The higher oil prices go, particularly in the near term, the higher demand will be for Imperial Petroleum’s services. Today, calls for $200 oil via the options market have sent investors looking for alternative ways of playing this trade. One such interesting vehicle is IMPP stock.

Now, whether $200 oil materializes or not remains to be seen. Options volumes can sometimes reflect where traders see a specific commodity going. However, in many cases, these bets are simply hedges against “worst-case scenarios” that may or may not play out. That said, there could be significant demand for short-term oil storage in the near term. And today, investors are buckling in and betting on IMPP stock as an interesting way to gain leverage to this trade.

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On the date of publication, Chris MacDonald did not have (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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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