Whiting Petroleum stock
Whiting Petroleum (WLL) stock didn’t make much headway last week. It continued to stay low as crude oil prices remained at sub-$50 levels. On Tuesday, March 14, 2017, WLL stock fell ~4.0% following a 1.4% fall in crude oil prices the same day.
While both crude oil prices and WLL stock recovered from those levels toward the end of the week, they continued to stay low compared to levels at the beginning of the year, as you can see in the graph below.
Whiting Petroleum stock has fallen 27.5% since the beginning of the year. It has underperformed the Energy Select Sector SPDR ETF (XLE), which has fallen 8.4% during the same period. The broader market S&P 500 ETF (SPY) has risen ~5.2%.
Why the weakness in crude oil prices?
Crude oil prices (USO) (UCO) have remained weak due to global supply glut concerns. Investors are worried about the OPEC (Organization of the Petroleum Exporting Countries) production cut being offset due to rising US supplies.
Having said that, crude oil inventories saw an unexpected fall in the week ended March 10, 2017. It seems that a more significant draw would have been necessary in order for crude oil prices to rise above $50 per barrel. So investors will be closely watching the weekly inventory report of the EIA (U.S. Energy Information Administration).
Another key factor affecting oil prices is rising US rig counts. To find out more on this, be sure to read Why Oil Rigs Could Drag Oil Prices Even Lower.
As you can see in the above graph, Whiting Petroleum stock has closely followed crude oil prices. So investors will be closely tracking the impact of indicators such as oil rig counts and crude oil inventories on oil prices and the consequent impact on WLL stock.
Could there be another reason?
Whiting Petroleum stock might also be seeing bearish trends due to its planned ~96.0% increase in 2017 capital expenditures compared to 2016 levels. The company’s production expectation hasn’t risen concurrently with its increased capital expenditures.
As a result, Whiting Petroleum stock failed to rise significantly despite its upbeat 4Q16 earnings.