Despite Hurricane Ida’s impact on U.S. oil production and refineries, the price of oil has stayed relatively stable for US consumers. Surprisingly, the halt to 75% of the Gulf’s offshore oil production since late August has not dramatically affected the national average price of regular unleaded gasoline which has risen only a few pennies in the aftermath. However, Allied Energy Corp. (OTC: AGYP) stock and others in the sector enjoyed gains on September 10th in part due to bullish oil market sentiments.

Oil Catalysts

The price per barrel rose above $73 on Friday due to a conglomeration of different factors – one of which being the amicable phone call between President Biden and President Xi Jinping. This buoyed hopes of improved US-China trade relations which was reflected in the oil and equity markets. 

The oil rally was also inspired by predictions that OPEC will begin output tapering based on its demand growth forecast for 2022. While its Monthly Oil Market Report (MOMR) has outlined the same demand outlook for the last two months, sources are suggesting that the Delta variant and other concerns could affect its September MOMR – scheduled to be released September 13th. 

In light of government stimulus packages, vaccination programs, and a general easing of the pandemic, OPEC has so far remained bullish for 2022. OPEC has remained consistent in its prediction that global oil demand for 2022 will average 99.9 million BPD. But the International Energy Agency set a different tone in its August report, highlighting Delta variant restrictions across Asia. 

Yet, the USA, China, and India – the world’s largest consumers of oil – have already exceeded pre-pandemic consumption levels. In Q4 China is expected to experience a notable 13% increase in oil demand over the same quarter in 2019. This demonstrates a growing appetite for oil while natural gas has recently experienced a similar surge. 

Natural Gas Outlook

Unseasonably high heat across parts of the USA has driven up natural gas prices which are largely contingent on weather demand. Areas dependent on power plants fueled by natural gas have contributed to the surge as low supply and increased demand drove the benchmark gas futures contract to some of the highest levels in years. This could continue depending on what this fall and winter has in store; but considering increasing weather volatility and changing climates, natural gas may have a strong future. 

Allied Energy Corp.

Situated firmly at the intersection of increasing oil and gas demand is the domestic energy development and production company – Allied Energy Corp. (OTC: AGYP). After acquiring several sites in South and East Texas, the company began work on its Green Lease and Annie Gilmer Lease sites in June. Since then AGYP has made steady progress in its business strategy of reworking and recompleting the existing oil and gas wells on these sites. 

The company secured a 100% working interest and 80% net revenue interest ownership stake in the two wells on the Green Lease Site in March. At the time, CEO George Monteith stated that their “research shows these particular reservoirs can be accessed through both vertical and horizontal drilling and should respond well to our modern re-completion techniques”. 

Despite general delays, the company has made quick progress – commissioning a petroleum engineer as soon as July to publish an economic report on both sites. His findings have since been disclosed using the conservative market price of $46.26 per barrel. According to the engineer’s findings, the Green Lease site holds $2,944,900 of proved oil and $18,536,600 of probable and possible oil while the Annie Gilmer site holds $6,704,900 in proved oil and gas reserves with $5,489,900 in probable and possible reserves.

Now AGYP is moving into its production phase using pump jacks at both wells on the Green Lease site. These appear to be triplex pumps which are capable of moving 1000 barrels of fluid per day. According to videos released on September 8th, operations are going as planned and the company may have product to show shareholders very soon. 

AGYP has made clear that it “will not entertain toxic funding offers and will continue to develop non-dilutive funding when required”. As it continues to secure non-dilutive funding for its oil projects, AGYP may begin looking to the future as it works to capitalize on the “thousands of wells that were abandoned while still commercially productive in their zones of completion”. Given the positive oil and natural gas outlook, AGYP could find itself perfectly situated to supplement the domestic supply of these essential resources.

Media Sentiment

With these catalysts on the horizon, many investors are watching the oil sector for new opportunities.

Technical Analysis

AGYP stock chart

Trading at $.385, AGYP stock recently reached a notable $.428 on September 10th before losing some of its gains before market close. This puts its immediate support near .351 and its secondary support at .34. The resistance point of AGYP stock appears near .428. Accumulation has been volatile, spiking along with PPS on the 10th. The RSI is currently at 61.9 and could move down. Following a bullish crossover before market close, the MACD moved to the upside with no sign of a crossover.

Should you Buy?

In spite of advancements in renewable energy, there is clearly a strong recovery demand for oil and natural gas globally. As the US emphasizes its energy independence in the coming years, this sector could be a worthwhile investment. Natural gas holds particular promise considering the effects of climate change on weather related demand for electricity in parts of the country. AGYP has just begun proving its model’s success this week, but has plans for further expansion and acquisition of other marginal wells. While the company currently operates on a small scale, AGYP stock has the potential to provide a good ROI to its shareholders.


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