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How US Crude Oil’s Rise Could Push Energy Stocks Higher

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How US Crude Oil’s Rise Could Push Energy Stocks Higher PART 1 OF 5

More than 2-Year High for Crude Oil: Which Oil Stocks Could Roar?

US crude oil

On November 6, 2017, US crude oil (USO)(DBO)(OIIL) December futures rose 3.1% and closed at $57.35 per barrel—the highest closing price for active US crude oil futures since July 1, 2015.

Rising geopolitical tensions between Saudi Arabia and Iran over an attempted missile attack on Saudi Arabia’s capital helped oil prices advance. Moreover, the arrests in Saudi Arabia over the weekend could point to political instability in the country.

More than 2-Year High for Crude Oil: Which Oil Stocks Could Roar?

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These factors fueled oil prices in the last few trading sessions. However, oil traders must also consider the bearish drivers despite rising oil prices.

From October 30, 2017, to November 6, 2017, US crude oil futures rose 5.9%. During this period, the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) rose 0.7% and 0.9%, respectively. Oil prices can be a bullish catalyst for these equity indexes.

Oil-weighted stocks

The list below highlights the oil-weighted stocks that had the highest correlations with WTI crude oil active futures in the seven calendar days ended November 6, 2017:

  • Hess Corporation (HES): 94.3%
  • Denbury Resources (DNR): 84.9%
  • Whiting Petroleum (WLL): 67.5%
  • California Resources (CRC): 62.2%
  • Continental Resources (CLR): 61.8%

These oil-weighted stocks outperformed US crude oil prices in the trailing week. CRC and DNR were among top three gainers that we’ll discuss in the next part.

The oil-weighted stocks that had the most negative correlation with US crude oil futures in the last five trading sessions follow:

  • Callon Petroleum (CPE): -20.4%
  • Occidental Petroleum (OXY): -23.6%

We garnered our list of oil-weighted stocks used to identify these top- and bottom-correlated stocks from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) with at least 60% production mix in oil.

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