Euronav NV. (EURN), an independent crude oil tanker company, closed Wednesday’s regular trading session at $11.24 after sliding by 3.77% during the day. In the premarket session, EURN stock has bounced back, as it has surged 11.48% and as a result, is trading at $12.53 at the time of the writing.
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Combination Between EURN & Frontline
The change in EURN fortunes happened following the announcement of a stock-for-stock combination between Frontline Ltd. and Euronav. Hours ago, it was announced that both the parties had signed a term sheet that got unanimous approval from the Board of Directors. The term sheet was related to a potential stock-for-stock combination between both entities. Euronav and Frontline shareholders would own 59% and 41% of the combined entity respectively.
What’s Happening in Transportation Industry?
Transportation stocks have come up as the worst-performing stocks during the last week, as the investors are fearful that a steep hike in interest rates by the Federal Reserves and soaring inflation would result in decreased spending by the consumers. This, in turn, would have a direct impact on the companies involved in the transportation business. Alongside, rising oil prices have also proven to be a cause of concern for these businesses.
Catalyst Behind EURN Rise?
The last couple of days has seen EURN stock’s sojourn on a rising trajectory despite a general decline in the transportation sector. Increased demand for oil tankers could be termed the catalyst behind this optimism associated with EURN as OPEC member countries had decided to increase oil production in the wake of Russian Ukraine tensions, directly impacting the performance of oil and gas transportation companies.
Looking ahead, market observers are of the view that oil and gas production is expected to increase further in the upcoming months, which would require more tankers for their transportation. Hence, on the business front, EURN could see a successful time ahead, which the turn would have a direct impact on the stock performance as well.