So, you know how sometimes a stock goes up for a good reason, like a great earnings report? And sometimes it goes up for a less-specific, more-terrifying reason, like the potential collapse of global trade through a vital shipping lane? Trio Petroleum Corp. (TPET) is having one of those latter moments.
The small-cap oil explorer is surging again in Monday's premarket, extending a huge Friday gain. It's the kind of move that happens when traders, spooked by headlines, pile into anything with "energy" or "petroleum" in the name. The catalyst is an escalating conflict that has nearly halted shipping through the Strait of Hormuz—you know, that little waterway that normally moves about 20 million barrels of oil every single day.
When that chokepoint gets squeezed, oil prices do what you'd expect: they spike. And spike they have. Oil surged more than 10% on Monday, with both WTI and Brent staying above $100 a barrel after briefly touching around $120, according to Trading Economics. In this environment, even a company drilling in Monterey County, California, and Uintah County, Utah, can catch a bid.
For the record, Trio Petroleum is an oil and gas exploration and development company. Its main asset is a working interest in the South Salinas Project in California, which includes six existing idle wells and one active well called the HV-1. It's not exactly in the Persian Gulf, but in a market panic, proximity isn't always the point.
The technical picture tells the story of a stock that was already doing well and just got a massive adrenaline shot. Over the past year, TPET is up 51.97%. Right now, it's trading way, way above its key moving averages: 229.8% above its 20-day simple moving average (SMA), 204% above its 50-day SMA, and 170.7% above its 100-day SMA. That's the chart of a stock with serious, no-doubt-about-it bullish momentum.
The Relative Strength Index (RSI) sits at 67.06. For those keeping score at home, that suggests the stock is gaining momentum and approaching overbought territory, but isn't there yet. There might still be some room to run, or at least that's what the momentum traders are betting on.
In Monday's premarket, Trio Petroleum shares were up 21.76% at $2.35. It's a wild ride, powered less by company news and more by the age-old market truth: when oil gets scary, oil stocks go up.
