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Why Continental Resources Stock Jumped as Much as 12% Today

By Reuben Gregg Brewer - Apr 14, 2021 at 4:11PM

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Although the big news was really oil prices, a company update released yesterday probably helped to support today's gains.

What happened

Shares of U.S. exploration and production company Continental Resources (CLR 0.15%) rose roughly 12% in early trading on April 14. At 3:30 p.m. EDT, the stock had given back a portion of its gains, but was still higher by around 8%. 

So what

The big story today for Continental Resources was likely oil prices, which moved notably higher. The International Energy Agency (IEA) increased its outlook for oil demand, based on economic reopenings and vaccine deployment, putting investors into a buying mood in the commodity space. And since the energy company's top and bottom lines are tied directly to the prices of the commodities it produces, it makes sense that investors would also look to buy Continental Resources' shares. Just one day before, meanwhile, OPEC increased its demand outlook, too. So there was probably a bit of a double positive on the oil front.  

A man with a notebook in front of an oil well.

Image source: Getty Images.

But the OPEC update wasn't the only news of importance that came out on April 13 when it comes to Continental Resources, as the energy driller provided a business update. Although it noted that the February winter storms hampered its production, management still believes it is on pace to meet or exceed its full-year production guidance. Clearly good news, particularly when paired with rising oil prices today. It also noted improvements on its balance sheet, with debt falling from roughly $5.5 billion at the start of the year to around $5 billion by the end of the first quarter. That's good news, too, but the backdrop of strong production results through the rest of the year was probably more important to the stock action today given the rise in energy prices.   

Now what

Oil prices rise and fall all the time, so it's probably best to take today's price move in Continental Resources with a grain of salt. And, frankly, OPEC and the IEA projections have seen their own volatility over the past year, so reading too much into that news is likely not a great call, either. However, the debt reduction at Continental Resources is very positive, as is its strong production outlook. So there are some fundamental improvements of note here if you are a long-term investor.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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