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Energy Stocks: Analyzing Quantitative Insights

PART:
1 2 3 4
Part 2
Energy Stocks: Analyzing Quantitative Insights PART 2 OF 4

Did Oil-Weighted Stocks Outperform Crude Oil?

Oil-weighted stocks and crude oil

In this part of the series, we’ll look at the returns of an equally weighted basket of oil stocks that operate with a production mix of at least 60.0% crude oil (USL) (OIIL) (UWTI) (DWTI). They’re also part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

Did Oil-Weighted Stocks Outperform Crude Oil?

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From December 12 to December 19, 2016, these stocks fell 0.1% compared to a 1.3% fall in WTI (West Texas Intermediate) crude oil futures contracts for February delivery during the same period.

During that period, Kosmos Energy (KOS) rose 8.4%. RSP Permian (RSPP) and Oasis Petroleum (OAS) rose 3.5% and 2.8%, respectively. These three stocks outperformed their peers.

Synergy Resources (SYRG), Callon Petroleum (CPE), and California Resources (CRC) fell 2.7%, 4.1%, and 4.9%, respectively, during the same period. They underperformed their peers.

In the previous part of this series, we saw how crude oil can impact some of these oil stocks. The performances of these oil-weighted stocks could also be related to their earnings and the market’s expectation for their future prospects.

Performance of oil-weighted stocks and crude oil since 2016 lows

On February 11, 2016, US crude oil touched a 12-year low. From February 11 to December 19, 2016, US crude oil active futures contracts rose 102.4% on a closing price basis. Our basket of equally weighted upstream stocks rose 126.2% during that period. Below are the returns of some upstream companies during this period.

Stocks that outperformed their peers during this period include the following:

  • Denbury Resources (DNR) – 283.5%
  • Oasis Petroleum – 274.1%
  • California Resources – 210.1%

Stocks that underperformed their peers during this period include the following:

  • Kosmos Energy – 57.6%
  • Diamondback Energy (FANG) – 55%
  • Occidental Petroleum (OXY) – 14.2%

Crude oil–weighted stocks outperformed crude oil in the last five trading sessions and since oil’s 2016 low in February. In the next part of this series, we’ll see how much natural gas prices impact natural gas–weighted stocks.

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