Crude oil is trending higher
On December 23, 2016, WTI (West Texas Intermediate) crude oil (USO) (OIIL) (USL) (SCO) February contracts closed at $53.02 per barrel, ~0.1% higher than the previous closing price. Optimism surrounding 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.
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 23 to December 23, 2016:
- California Resources (CRC): 75.5%
- Diamondback Energy (FANG): 75.2%
- Whiting Petroleum (WLL): 74.4%
- Denbury Resources (DNR): 74.2%
- Oasis Petroleum (OAS): 73.9%
- Occidental Petroleum (OXY): 73.4%
- Concho Resources (CXO): 72.5%
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.