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Why XLE’s Oil and Gas Drilling Stocks Gained on April 13

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XLE’s oil and gas drilling stocks gained

On April 13, the oil and gas drilling stocks in the Energy Select Sector SPDR ETF (XLE) gained. Transocean (RIG), Diamond Offshore Drilling (DO), Noble (NE), ENSCO (ESV), and Helmerich & Payne (HP) are the five oil and gas drilling stocks in XLE. They account for a total ETF weight of 1.6%. On April 13, these stocks gained 2.9%, 1.4%, 0.18%, 0.54%, and 0.07%, respectively. XLE gained 0.11%.

As we discussed in the previous article, the US crude oil inventory data were released on April 13. The data showed a surge in the US crude oil inventory levels by 6.6 MMbbls (million barrels) in the week ending on April 8. Even though the inventories surged, West Texas Intermediate crude oil witnessed a knee jerk reaction and traded in a range with increased volatility. The decrease in the domestic US crude oil output along with the decline in gasoline supplies were the factors in favor of the oil and gas drilling stocks on April 13.

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Higher short interest ratio

The common factor among the five oil and gas drilling stocks mentioned above is the higher-than-average short interest ratio. The short interest ratio for a stock is the ratio of shares being shorted to the shares in the market. The average short interest ratio of the Energy Select Sector SPDR ETF (XLE) is 4%. The short interest ratio of Transocean, Diamond Offshore Drilling, Noble, ENSCO, and Helmerich & Payne are 5.5%, 5.5%, 4.4%, 2.1% and 11.8%.

Quarterly earnings

The quarterly earnings of Transocean and Diamond Offshore Drilling are expected to be out by May 4 and May 2. ENSCO’s earnings are estimated to be released on April 28. Read Are Analysts Too Optimistic About Ensco’s Earnings in 2017? to learn what analysts think about ENSCO’s earnings.

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 0.01% and the iShares U.S. Oil & Gas Exploration & Production ETF (IEO) gained 0.03% on April 13.

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