Oil outlook as Chesapeake Energy Corp. soars over 100%

Yahoo Finance’s Jared Blikre joins Heidi Chung to discuss the latest oil & energy outlook as OPEC and allies agree to extend record oil production cut.

Video Transcript

HEIDI CHUNG: Welcome back to "The Ticker." Crude oil sinking today after a big OPEC+ meeting over the weekend. The commodity is falling, but energy stocks are trading higher today. We have our very own Jared Blikre, our chart master, here with all of the details. Jared, break down what's going on for us.

JARED BLIKRE: Well, we've seen energy have a huge bid over the last few weeks. That's as value and cyclical plays are in the forefront because of the reopening trade, or at least hopes for a successful reopening. Now, if we look at the Wi-Fi interactive, we can see a lot of the big-cap names, like Chevron here and Exxon, they're up 1% to 2%, Royal Dutch Shell up 3%. But you start going into some of the smaller players here-- and we'll sort by performance-- Chesapeake up 130%. This is today only. Whiting is up 102% This is a bankrupt company, a company involved in bankruptcy proceedings right now. And guess what? Diamond Offshore, another company in bankruptcy, they're also up 73%.

So why is there this seeming disconnect, especially as crude oil prices are coming off their highs by about 2% or 3% right now? Well, the shale oil play is really what it's all about. And a lot of these wells have been shuttered. And as the price of oil nears 45 barrels-- $45 per barrel, which is the average breakeven price in the region right now, the Permian Basin, you could see a lot of these wells reopen.

Now, it would have to stay there for some time. It's not like you get to 45 and immediately everything reopens. So there's a lot of hope in this trade. And having said that, there could be a lot of downside risk, as well. Just looking at some of these names that we already looked at, Chesapeake is probably one of the biggest smaller shale places-- or shale players. Occidental is pursuing asset sales right now, and there were rumors last week that they might be having a shakeup in management. Carl Icahn owns about 10%.

So there's a lot of-- I'd say there's a lot of drama in this space right now, and people just seem to be chasing anything that's cheap higher. I mean, just look at the trade with Hertz right now, which is up about 200%. Not related to oil at all, but you get the point. So here's crude oil and what it's done today. It's down about 3% to $38 per barrel. We can see it finally crossed $40 a barrel just briefly overnight.

Now, looking at a longer-term chart, we have year-to-date here, and we are reaching resistance. There's actually a gap around 42 in the July contracts. So there are technical reasons why crude oil might be having a pause, or might be due for a pause. And in addition, even though the oil cuts were extended by OPEC+ into July, the Saudis were cutting extra. And that's going to stop at the end of the month. So lots going on here, Heidi.

HEIDI CHUNG: Jared, I feel like we haven't talked about Saudi Aramco in a very long time. Just want to get an update on how that company is doing right now.

JARED BLIKRE: Real quick, they're still down about 8% from the year, but they are above their IPO price. They've taken a lot of moves to preserve their dividend, which is $75 billion a year. That's very painful for them because they're paying that out ahead of some of their social programs. But that's where they are right now.

HEIDI CHUNG: All right, Jared, thanks for breaking that down for us.