What happened

The volatility in uranium stocks of late could make even seasoned investors jittery. After crashing double-digits this week through Wednesday, most uranium stocks bounced back sharply on Thursday and surged as the day progressed. Here's how much some of the best-performing uranium stocks had rallied as of 2:50 p.m. ET:

  • Energy Fuels (UUUU): Up 15%.
  • Denison Mines (DNN): Up 11.1%.
  • Uranium Energy (UEC 0.60%): Up 17.3%.

Uranium prices might be cooling off a bit, but the buzz around nuclear energy isn't. At the same time, something the world's largest uranium mining company just said suggests the uranium market could remain tight.

So what

After hitting an 11-year high of $60.4 per pound on March 11, uranium prices were hovering around $55 per pound as last reported by   TradingEconomics.com as peace talks between Russia and Ukraine continue.

Yet, that drop isn't worrying investors much as it's all but speculation for now, and uranium prices, in fact, could head higher again if the U.S. imposes sanctions on Russian uranium imports.

On March 17, four Senators introduced a bill to ban uranium imports from Russia. The U.S. relies heavily on cheap Russian uranium to meet demand for electricity, almost 20% of which is generated from nuclear energy. Uranium is a key fuel on which nuclear reactors run.

An aerial view of a running nuclear power plant station with two nuclear reactors.

Image source: Getty Images.

Such a ban, if implemented, would come at a time when the uranium market is already tightening, even compelling utilities to close new contracts at high uranium prices. Utilities that produce nuclear energy use uranium fuel to operate nuclear reactors.

In fact, the world's largest uranium mining companies that were quick to curtail production in recent years to support languishing uranium prices are in no rush to produce more.

Just yesterday, the world's largest uranium producer, Kazatomprom, said it still intends to stick with its plan to "flex down planned production volumes by 20% for 2018 through 2023." Kazatomprom's 2022 production, though, is expected to be lower than last year given the supply constraints and the impact of an asset the company sold off.

Barely weeks ago, Cameco (CCJ 0.82%), another major uranium producer, said it doesn't intend to change its ongoing "supply discipline" and will boost production only to honor its contracts and not to build inventory or "add to an oversupplied market."

All of these factors added up to fuel interest in uranium stocks on Thursday. If you're wondering why Uranium Energy was the hottest stock among all, it's because the company also filed its second-quarter earnings report on March 17.

Uranium Energy reported $13.2 million in revenue for the quarter versus nil revenue in the year-ago period. It derived revenue from both the sale of uranium and uranium processing as part of an agreement it acquired when it bought Uranium One in December. The acquisition, in fact, was such a big deal that I even put Uranium Energy stock on my list of the best uranium stocks to buy last year. 

Here's something else you might want to know: The acquisition gives Uranium Energy a solid foothold in Wyoming, a state that's pro-uranium. Coincidentally, Wyoming congresswoman Liz Cheney tweeted her support for uranium production the morning of March 17:

Now what

There's another reason why uranium stocks lit up today: Oil and gas prices rebounded sharply, and every time prices of fossil fuels rise, the jump adds to the appeal and prospects for alternative energy sources like nuclear energy.

With so many factors in favor of uranium emerging in just one day, the Thursday rally in uranium stocks was no surprise.