Crude oil and natural gas prices
For the week ending August 4, 2017, crude oil (USO) prices fell from $49.71 per barrel to $49.58 per barrel—a decrease of less than one percentage point. Currently, crude oil prices are consolidating around their 200-day moving average, which stands at $49.47. Natural gas (UNG) prices fell ~6% last week. Natural gas prices fell from $2.94 per MMBtu (million British thermal units) to $2.77 per MMBtu.
ConocoPhillips’s production volume mix contains ~40% natural gas, ~38% crude oil, ~14% bitumen, and ~8% natural gas liquids. However, when you look at it from ConocoPhillips’s operating revenue mix point of view, more than ~72% of its operating revenue comes from liquids (crude oil, bitumen, and natural gas liquids) sales.
Despite falling crude oil (USO) and natural gas (UNG) prices last week, ConocoPhillips’s (COP) stock price outperformed crude oil and natural gas prices. Its stock price rose ~1% marginally or from $45.26 to $45.56. ConocoPhillips announced its 2Q17 earnings on July, 27. The company beat the EPS estimates by $0.16 in 2Q17. ConocoPhillips reported an adjusted profit of $0.14 per share, while Wall Street analysts’ consensus was for a loss of $0.02 per share.
Due to falling crude oil and natural gas prices last week, the Energy Select Sector SPDR ETF (XLE) underperformed the S&P 500 ETF (SPY). SPY rose 0.20% marginally, while XLE fell more than 1% last week. ConocoPhillips’s peers Pioneer Natural Resources (PXD) and EOG Resources (EOG) fell ~16% and ~5%, respectively, last week. Just like ConocoPhillips, Pioneer Natural Resources and EOG Resources also have operations in the Permian Basin.
XLE generally invests at least 95% of its total assets in oil and gas companies. According to the SPDR S&P500 ETF Trust prospectus “The Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index.”
In the next part, we’ll take a look at ConocoPhillips’s implied volatility.