
Crude Oil Makes New 2016 Highs: Following Oil-Weighted Stocks
By Rabindra SamantaUpdated
Crude oil is trending higher
On December 12, 2016, WTI (West Texas Intermediate) crude oil (UWTI) (USO) (OIIL) (USL) (SCO) (DWTI) January contracts closed at $52.83 per barrel. It was ~2.6% higher than the previous closing price and the highest level for 2016. Optimism around OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC producers agreeing to cut production fueled the bullish sentiment among traders. It helped oil prices continue their upturn.
In this series, we’ll take a look at the correlations between crude oil–weighted stocks and crude oil. We’ll also look at the correlations between natural gas–weighted stocks and natural gas.
Oil-weighted stocks
Let’s look at some of the upstream companies that are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and operate with a production mix of at least 60.0% in crude oil.
Below are the correlations of these oil-weighted companies with WTI crude oil from November 12 to December 12, 2016.
- Occidental Petroleum (OXY) – 77.5%
- Concho Resources (CXO) – 77.2%
- California Resources (CRC) – 77.2%
- Kosmos Energy (KOS) – 75.1%
- Hess (HES) – 74.5%
- Denbury Resources (DNR) – 74.3%
- Whiting Petroleum (WLL) – 74.1%
Oil-weighted stocks in XOP that had the lowest correlation with crude oil include the following:
If you’re bullish on crude oil, particularly after OPEC and non-OPEC producers’ crucial deal, you might be interested in some of the stocks that have a high correlation with crude oil to realign your portfolio.
In the next part of this series, we’ll look at the returns of crude oil–weighted stocks compared to crude oil.