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Key Insights into Energy Stocks for Investors

PART:
1 2 3 4
Key Insights into Energy Stocks for Investors PART 1 OF 4

Crude Oil Upturn: Which Oil-Weighted Stocks to Consider

Crude oil is trending higher

On December 23, 2016, WTI (West Texas Intermediate) crude oil (USO) (OIIL) (USL) (SCO) February contracts closed at $53.02 per barrel, ~0.1% higher than the previous closing price. Optimism surrounding OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC producers agreeing to cut production fueled the bullish sentiment among traders. It helped oil prices continue their upturn.

Crude Oil Upturn: Which Oil-Weighted Stocks to Consider

In this series, we’ll take a look at the correlations between crude-oil-weighted stocks and crude oil. We’ll also look at the correlations between natural-gas-weighted stocks and natural gas.

Oil-weighted stocks

Let’s look at some of the upstream companies that are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and operate with a production mix of at least 60.0% in crude oil.

Below are the correlations of these oil-weighted companies with WTI crude oil from November 23 to December 23, 2016:

  • California Resources (CRC): 75.5%
  • Diamondback Energy (FANG): 75.2%
  • Whiting Petroleum (WLL): 74.4%
  • Denbury Resources (DNR): 74.2%
  • Oasis Petroleum (OAS): 73.9%
  • Occidental Petroleum (OXY): 73.4%
  • Concho Resources (CXO): 72.5%

Oil-weighted stocks in XOP that had the lowest correlation with crude oil include the following:

  • Kosmos Energy (KOS): 66.5%
  • Synergy Resources (SYRG): 60.1%

If you’re bullish on crude oil, particularly after OPEC and non-OPEC producers’ crucial deal, you might be interested in some of the stocks that have a high correlation with crude oil to realign your portfolio.

In the next part of this series, we’ll look at the returns of crude-oil-weighted stocks compared to crude oil.

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