Is Oil Outperforming Oil-Weighted Stocks?
Between September 1 and September 11, 2017, our collection of oil-weighted stocks fell 2.9%, while the US crude oil October futures rose 1.6%. Our collection of oil-weighted stocks include upstream stocks from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) that have a minimum 60% production mix in crude oil.
Oil-weighted stocks that outperformed during this period follow:
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OXY and CXO were among the top five oil-weighted stocks that had the highest correlations with US crude oil prices in the last five trading sessions. We discussed that trend in Part 1 of this series.
Oil-weighted stocks that underperformed during this period follow:
- Carrizo Oil & Gas (CRZO): fell 14.8%
- Whiting Petroleum (WLL): fell 10.3%
- RSP Permian (RSPP): fell 5.7%
CRZO had a negative correlation with US crude oil futures between September 1 and September 11, 2017, while RSPP had the least positive correlation during the first 11 days of the month.
Apart from the correlations with oil, these oil-weighted stocks could also track the broader market’s movements.
Between February 11, 2016, and September 11, 2017, US crude oil October futures rose 83.4%. On February 11, 2016, US crude oil active futures closed at their 12-year low. During this period, the United States Oil Fund LP ETF (USO), which tracks US crude oil futures, rose just 22.9% due to a negative roll yield.
Our collection of oil-weighted stocks rose only 31.3% during this period. The oil-weighted stocks that outperformed during this period follow:
- Continental Resources (CLR): rose 82.2%.
- Kosmos Energy (KOS): rose 77.6%.
- Oasis Petroleum (OAS): rose 67.1%.
The oil-weighted stocks that underperformed their peers between these two dates follow:
- Carrizo Oil & Gas (CRZO): fell 49.4%.
- Whiting Petroleum (WLL): fell 16.3%.
- Occidental Petroleum (OXY): fell 1.2%.
In the next part, we’ll discuss the correlations of natural gas–weighted stocks with natural gas.