By Avi Salzman
Energy stocks were some of the biggest winners on Wednesday after Donald Trump clinched the presidential election.
Trump went all-in on oil during his campaign, promising to open up more land to drilling and reduce environmental rules. Those policies could help big household-name oil stocks like Exxon Mobil, which was up 1.4% Wednesday. But in the near-term, the biggest impact will be on a handful of lesser-known names.
The Energy Select Sector SPDR exchange-traded fund was up 3.6%, versus a 1.9% gain for the S&P 500. Some stocks were quite a bit higher, though.
The biggest energy winners included natural gas stocks and oil services names, both of which stand to gain from Trump's policies.
Oil services companies Baker Hughes, SLB, and Halliburton saw their shares rise 7.4%, 5.9%, and 5.8% respectively, in recent trading. Trump could open up more oil and gas leases in the Gulf of Mexico, which would benefit oil services companies because they would have more projects to work on.
One reason these stocks are rising so much is they have been lagging in recent weeks. Several oil services companies have struggled as oil producers have cut back on the number of rigs they're using, amid slumping oil prices.
Investors had also ramped up short selling of oil services stocks. Short selling is a bet that a stock will go down: An investor borrows shares and then sells them right away, hoping to buy them again later at a lower price, return them to the lender, and pocket the difference.
Large short positions can cause stocks to spike on good news, because short sellers have to cover their negative bets by buying the stock. Among the smaller oilfield stocks that were rising Wednesday were Helmerich & Payne, Patterson-UTI, Liberty Energy, Transocean, and Noble.
Natural gas stocks were also rising sharply, with EQT up 7.9%, Antero Resources up 6.6%, and Expand Energy rising 4.9%. Trump is almost certain to reverse the Biden administration's pause on new liquefied natural gas facilities, which could increase demand for natural gas later this decade.
Write to Avi Salzman at avi.salzman@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 06, 2024 12:14 ET (17:14 GMT)
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