3 Penny Stocks To Buy Or Sell After Saudi Oil News?
Penny stocks have taken center stage as broader markets continue to experience volatility. The energy sector is the latest to see market dynamics and global events have helped spur this movement.
Saudi Arabia is one of the largest oil producers in the world and one of the largest suppliers to the United States. However, the drone attack on Saudi oil facilities on Saturday plunged global oil markets into turmoil. This has caused oil prices to soar around the world.
The situation caused much of the world’s oil supply to plummet, and oil prices soared to 19% at one point. However, the turmoil in the oil markets has also provided an opportunity for enterprising investors to make money with penny stocks. In this regard, investors seem to have acted quickly.
Penny Stocks to Buy or Sell – Energy Sector
The massive rise in the price of oil has translated into significant gains on and among offshore drilling stocks; some of them could be classified as penny stocks. Some of the oil and gas stocks that posted impressive gains yesterday include:
- Denbury Resources Inc. (DNR Stock Report) climbed 28%; 8% drop Tuesday
- Nabors Industries Ltd (NBR Stock Report) grew by more than 18%; 9% drop Tuesday
- Torchlight Energy Resources, Inc. (TRCH Stock Report) gained 9%; 1% drop Tuesday
- Offshore drilling company Seadrill (SDRL Stock Report) managed to gain up to 6.60% as the price of oil began to rise globally; 7% drop Tuesday
However, the question remains whether this rally in oil can continue and for now that answer is no for these penny stocks to watch. Additionally, can it remain an active industry to fuel future gains in sector stocks? In this regard, it should be noted that state oil producer Saudi Aramco has already shut down up to 50% of its production facilities at this point. But the latest news on Tuesday suggested that Saudi oil production could return to normal faster than initially expected.
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So that was good news for oil drilling companies on Monday, but not so much on Tuesday. The rewards for these companies could be huge in such a situation, but it is important to note that the companies are unlikely to expand their drilling business. Thus, the gains from investing in these companies may not be as large as expected.
Penny Stocks and Global Events
Typically, global events like this tend to spill over into all price points in the stock market. Penny-listed stocks have generally reacted much more volatile than large energy stocks. For this reason, it is important to follow the news of the sector on a daily basis. And that’s exactly what we did today after seeing these latest reports plummeting oil stocks.
While it may look favorable one day, it can literally turn bearish within 12 hours. Industry news suggesting increased production from somewhere in the world may trigger the opposite reaction from the oil market. The oil and gas industry is fickle, so it’s important to note when inventory reports are about to come out. Other factors – like the Saudi attack – cannot be planned, but they are due to the nature of the industry. These are key elements when it comes to choosing penny stocks to buy or sell.
At the same time, when it comes to which penny stocks to watch, volatile fluctuations are of course expected. But along the same lines, a volatile industry associated with penny stocks can experience an exponential level of bullish and bearish activity. With all of this in mind, it may be a sign of caution for energy penny stocks for the remainder of this week.