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How Correlations with Energy Commodities Impact Upstream Stocks

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How Correlations with Energy Commodities Impact Upstream Stocks PART 1 OF 5

US Crude Oil Nearing $50: Which Oil-Weighted Stocks Could Gain?

US crude oil

On September 11, 2017, US crude oil (USO) (DBO) October futures closed at $48.07 per barrel. This closing price was 1.2% above the previous day’s closing price and 3.9% below the psychologically important level of $50. As the pressure of Hurricane Irma eased, the improving situation could have helped US crude oil prices move upward.

From September 1 to September 11, 2017, US crude oil October futures rose 1.6%. During this period, the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) rose 0.5% and 0.3%, respectively. Oil prices could be vital for these equity indexes.

US Crude Oil Nearing $50: Which Oil-Weighted Stocks Could Gain?

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Oil-weighted stocks

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.

Below are the oil-weighted stocks that had the highest correlations with crude oil prices in the past five trading sessions:

  • Oasis Petroleum (OAS): 94.5%
  • Occidental Petroleum (OXY): 89.2%
  • Diamondback Energy (FANG): 81.8%
  • Continental Resources (CLR): 78.5%
  • Concho Resources (CXO): 77.7%

Oil-weighted stocks that had the lowest correlations with oil prices during this period follow:

  • RSP Permian (RSPP): 22.8%
  • Carrizo Oil & Gas (CRZO): -3.3%

In the next part, we’ll analyze the returns of these oil-weighted stocks.

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