What happened
Uranium mining stocks are glowing a bright, clear green in Thursday morning trading -- up 10% and more across the board. As of 11:15 p.m. ET, shares of Energy Fuels (UUUU 0.10%) have risen 11.3%, while tiny Ur-Energy (URG -4.44%) is tacking on 13%. Meanwhile, Uranium Energy (UEC -1.56%) is leading the pack higher with a startling 16.8% gain.
There's one good reason for it: Uranium prices have turned north again.
Image source: Getty Images.
So what
Uranium is a volatile commodity. As investor hopes for a revival of nuclear power plant building have waxed and waned, uranium prices have experienced some serious ups and downs over the past couple of years. Per pound, prices of uranium rose more than 40% between mid-March and late May 2020, for example, then rose more than 60% between August and September last year, and most recently notched another 40%-plus gain between February and April earlier this year.
Uranium prices have also had some steep falls, relapsing 25% after last year's big run-up for example -- and falling more than 25% again after this year's spike. That latter pitfall, by the way, brought uranium prices down to right about where I was predicting they'd land back in December -- $46 and change. But once again, it seems the pendulum is preparing to swing higher.
After bottoming at $46.50 per pound last week, uranium prices have rebounded 6% to $49.25 at last report, according to data from Trading Economics. As this latest upswing gains momentum, it makes sense that uranium stocks would follow in the footsteps of the product they produce and sell.
Now what
Where uranium prices -- and uranium stock prices -- go from here is anybody's guess, however.
On the one hand, oil prices are coming back down today on news that Saudi Arabia might increase production to make up for the exclusion of Russian oil from many world markets -- reducing demand for alternative forms of energy. On the other hand, as energy research company Ocean Wall points out, sanctions on Russian exports or uranium have the potential to keep uranium prices rising due to curtailed supplies -- and Russia is the source for about 16% of the uranium going into U.S. nuclear reactors for example, and 20% of the EU's uranium.
And finally, while increased nuclear energy production seems like a no-brainer -- because it both decreases production of greenhouse gases and increases energy independence from Russia -- nuclear power plant production depends largely on political will and public support, both of which have been historically lacking in many Western countries.
Until something happens to make both politicians and consumers decide that nuclear power is the best solution to both our environmental and economic problems, I think uranium investors should expect to see continued cycles of price volatility -- both for uranium metal and for uranium stocks.
