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How Did Oil-Weighted Stocks Perform Compared to Crude Oil?



Oil-weighted stocks and crude oil

Now, we’ll look at an equally weighted basket of oil-weighted stocks that operate with a production mix of at least 60% crude oil (USL) (BNO). They’re also part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). From June 6 to June 13, 2016, these stocks rose 2.0%—compared to a 1.6% fall in West Texas Intermediate crude oil during the same period. The returns of these oil-weighted stocks are adjusted for dividends.

During the same period, Triangle Petroleum (TPLM) returned 99%. Halcón Resources (HK) and Synergy Resources (SYRG) rose 56.6% and 12.3%. These three stocks outperformed their peers.

On the other hand, Clayton Williams Energy (CWEI), Bonanza Creek Energy (BCEI), and Whiting Petroleum (WLL) fell 19.9%, 18.1%, and 15.7%, respectively, over the same period. They all underperformed their peers.

Apart from the impact of crude oil, which we looked at in the previous part, the performance of these oil-weighted stocks could be related to their earnings and the Market’s expectation for their future prospects.

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Oil-weighted stocks and crude oil since their 2016 lows

On February 11, 2016, US crude oil (USL) touched a 12-year low. From February 11 to June 13, 2016, US crude oil rose 86.5%. The basket of these equally weighted upstream stocks rose 76.5% over this period. Below are the returns of these upstream companies during this period:

Stocks that outperformed their peers:

  • Denbury Resources (DNR) – 275.7%
  • California Resources (CRC) – 123%
  • Whiting Petroleum (WLL) – 137.5%

Stocks that underperformed their peers:

  • Halcón Resources (HK) – 9.3%
  • Triangle Petroleum (TPLM) – 2.4%
  • Vaalco Energy (EGY) – 1.9%

Oil-weighted stocks outperformed crude oil in the last six trading sessions. However, they underperformed crude oil since crude’s 2016 lows.

Next, we’ll see how natural gas impacted gas-weighted stocks.


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