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Why Oil Outdid Oil-Weighted Stocks in the Trailing Week

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Upstream energy stocks

Between July 17 and 24, 2017, our list of oil-weighted stocks on average dipped 2.4% compared to a 0.2% rise in US crude oil (USO)(DBO) September futures. These oil-weighted stocks—with a production mix of a minimum 60% in oil—have been chosen from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

Diamondback Energy (FANG) rose 3% and outperformed other oil-weighted stocks in XOP in the last five trading sessions. Callon Petroleum Company (CPE) and Concho Resources (CXO) were other outperformers, with gains of 2.1% and 1.9%, respectively, during this period.

FANG and CPE both had correlations of more than 60% with US crude oil futures in the trailing week. During this period, US crude oil futures rose just 0.2%, but it closed in the green.

Oasis Petroleum (OAS), Carrizo Oil & Gas (CRZO), and Denbury Resources (DNR) were the underperformers among oil-weighted stocks. Between July 17 and 24, 2017, these three stocks plunged 4.2%, 8.7%, and 15.6%, respectively.

Investors should note that, apart from oil, sentiment in the broader markets could impact these oil-weighted stocks’ returns.

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Since last year

On February 11, 2016, US crude oil active futures dipped to their lowest closing price in the last 12 years. Since then, oil prices have recovered 76.8% while oil-weighted stocks on average gained only 37.4%.

Below is a list of outperformers among oil-weighted stocks.

  • Callon Petroleum (CPE): 78.9%
  • Oasis Petroleum (OAS): 73.9%
  • RSP Permian (RSPP): 72.2%

But Whiting Petroleum (WLL), Occidental Petroleum (OXY), and Carrizo Oil & Gas (CRZO) have been the underperformers since February 11, 2016. WLL rose just 1.2% while OXY and CRZO were down 4% and 35.2%, respectively, in this period.

So US crude oil active futures have outdone oil-weighted stocks both in the trailing week and since February 11, 2016.

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