Energy and Tech: Here’s Why Traders Are Buzzing about These Five Stocks Today

Transocean LTD (NYSE:RIG) and Seadrill Ltd (NYSE:SDRL) are in the headlines after Bloomberg published a gloomy article on the offshore drilling industry. Although Seadrill and Transocean see utilization rates bottoming by the the middle of 2017, Bloomberg’s Mikael Holter, noted that the utilization rates for those companies “could be stuck there for a long time”. In addition, rig rates might not rebound as quickly as crude prices. Senior consultant at IHS Tom Kellock was quoted as saying: “rates are going to come back more slowly than oil prices because of the overhang and the degree of competition and the oversupply of rigs, which is not at this stage being tackled”. Various analysts think that the utilization rate needs to reach 70-85% in order for rates to start moving up again. For the utilization rate to increase meaningfully, Transocean estimates that the number of working rigs needs to fall to 120 from 160 currently operating. Both stocks are moderately in the red this morning. According to our data, hedge funds weren’t that impressed with Seadrill Ltd (NYSE:SDRL), as only 17 funds held shares in the offshore driller at the end of June. Comparatively, almost double the number, 32 investors from our database had a stake in Transocean LTD (NYSE:RIG) in the same time period.

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