Whiting Petroleum’s stock
Whiting Petroleum (WLL) has been on a downhill slide for most of the year so far. The stock has given a return of an underwhelming -48% since the beginning of this year, underperforming the Energy Select Sector SPDR ETF (XLE), which gave a return of -14% in the same period. The broader market S&P 500 ETF (SPY) returned ~8.3% in the same period.
Crude oil prices affecting Whiting stock
Whiting Petroleum’s stock has gone downhill due to compounding fears about the future of crude oil prices, which likely caused investment firm Goldman Sachs to cut its ratings on the stock on May 30. After the downgrade, the stock saw a sharp drop as the graph above shows.
Oil prices have been under pressure due to excess supply and geopolitical tensions. The supply glut in the US could delay the balance that could come from OPEC production cuts. President Trump’s decision to withdraw from the Paris Climate Accord has also likely pulled prices lower.
Whiting Petroleum stock could also have been seeing bearish trends as a result of its planned ~96% increase in 2017 capital expenditures compared to 2016 levels. Whiting Petroleum’s production expectation hasn’t risen at the same rate as its capex.