Why Offshore Drilling Stocks Are Soaring Today
Shares of several offshore drilling stocks surged on Tuesday. Among the leaders were Diamond Offshore Drilling (NYSE: DO), Noble Corporation (NYSE: NE), Transocean (NYSE: RIG), and Ensco Rowan (NYSE: ESV), which all rallied more than 10% by 3:00 p.m. EDT on Tuesday. Fueling the surge in these stocks was a combination of higher oil prices and Transocean's better-than-expected second-quarter results.
Oil prices popped 2% on the day as traders started growing bullish that the Federal Reserve would cut interest rates. That move, in their view, will help jump-start the economy, which would drive up demand for oil.
That oil price rally sent the shares of several oil and gas producers soaring, since those higher prices would positively impact their cash flows. Offshore drillers joined that rally on the view that improving oil prices and demand will lead producers to boost their spending on offshore drilling projects.
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