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Why Denison Mines, Uranium Energy, and Energy Fuels Stocks All Popped Today

By Rich Smith - Jun 1, 2021 at 6:03PM

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Energy demand is surging so much, even OPEC is raising production.

What happened

Shares of uranium miners Denison Mines (DNN -0.83%), Uranium Energy (UEC 1.75%), and Energy Fuels (UUUU 0.21%) surged Tuesday, rising 5.6%, 5.8%, and 10.6%, respectively, by the time markets closed for the day.

Cartoon picture of two nuclear reactors generating steam

Image source: Getty Images.

So what

As reported today, a committee of the OPEC+ group of nations (OPEC, plus a few other oil-producing nations such as Russia that also have an interest in oil prices), decided today to continue with a planned increase of 840,000 barrels per day (bpd) in July production quotas.  

Oil demand is expected to grow by 6 million bpd, or 6.6%, to 96.5 million bpd on average this year, said, as economies open back up and demand for energy surges. By the fourth quarter this year, OPEC+ predicts global demand will surpass 99 million bpd, great news for oil stocks.

Now what

By the end of Tuesday trading, WTI crude prices had climbed 2.4% and Brent crude prices were up 1.6%. This has two big implications for energy investors. First and foremost, although you'd expect the announcement of a big increase in oil production to result in oil prices falling, that didn't happen -- suggesting there's a lot of demand for oil. And because oil prices went up, not down, that gives alternative energy sources, such as nuclear, room to charge more for their energy output as well.

Second, the increase in oil production naturally implies an increase in consumption -- and more greenhouse gases. That can be expected to increase interest in alternative energy sources, which suggests an even more direct benefit to nuclear power producers, and miners of nuclear fuel like Denison, Uranium Energy, and Energy Fuels, thus the increase in their share prices today.

Rich Smith 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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Stocks Mentioned

Uranium Energy Corp. Stock Quote
Uranium Energy Corp.
$4.36 (1.75%) $0.07
Denison Mines Corp. Stock Quote
Denison Mines Corp.
$1.20 (-0.83%) $0.01
Energy Fuels Inc. Stock Quote
Energy Fuels Inc.
$7.00 (0.21%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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