Are Oil-Weighted Stocks Escaping Oil’s Weakness?
Between August 25 and September 1, oil-weighted stocks rose 2.9% while US crude oil (USO)(DBO) October futures fell 1.2%. So, on average, oil-weighted stocks clearly avoided the fall in US crude oil prices.
Interested in CRC? Don't miss the next report.
Receive e-mail alerts for new research on CRC
The oil-weighted stocks that outperformed during this period are as follows.
CRC had the second-lowest correlation with US crude oil prices. We discussed it in Part 1 of this series.
The oil-weighted stocks that underperformed over this period are as follows.
Last week, Callon Petroleum (CPE) had the second-highest correlation with US crude oil prices.
These oil-weighted stocks are all constituents of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), with a minimum production mixes of 60% in oil. In the past five trading sessions, except for CPE, all oil-weighted stocks closed in the green. Positive broader equity market sentiment could be the cause.
Between February 11, 2016, and September 1, 2017, US crude oil active futures rose 80.4%. On February 11, 2016, US crude oil prices settled at a 12-year low. However, during this period, the United States Oil Fund LP (USO) rose only 21% because of the negative roll-yield. USO tracks US crude oil futures.
Oil-weighted stocks, on average, rose 34.6% between these two dates. However, the oil-weighted stocks that outperformed during this period were as follows.
- Continental Resources (CLR) rose 83%.
- Kosmos Energy (KOS) rose 78.8%.
- Oasis Petroleum (OAS) rose 72.3%.
The oil-weighted stocks below underperformed during this period.