Did Whiting Petroleum’s Stock Rise Due to Short Covering?



Short interest in WLL stock

Whiting Petroleum’s (WLL) short interest ratio (short interest as a percentage of float) on January 13, 2016, was ~13%. Its short interest ratio a month ago was ~24%.

The graph above shows that WLL’s short interest ratio fell sharply from 24% to 13% since the end of December 2016. Its stock, on the other hand, has risen in that time. This phenomenon, when a large short position suddenly drops, can be the result of what’s called a “short squeeze.” Traders rush to cover their short positions, causing the stock to rise as a result of the buying frenzy. This trend is evident in WLL. Its stock rose sharply following the sharp drop in its short interest ratio on December 29, 2016.

In Part 1, we explored other reasons for the increase in WLL’s stock.

But lately, WLL’s stock has been dropping, and its short interest ratio has remained flat.

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Peer comparison

In comparison, WLL’s peers Oasis Petroleum (OAS), Cimarex Energy (XEC), and Continental Resources (CLR) have short interest ratios of ~16%, 2.6%, and ~22%, respectively. These companies make up 4% of the iShares U.S. Oil & Gas Exploration & Production ETF (IEO).


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