On August 21–28, 2017, oil-weighted stocks fell 0.1% on average. During this period, US crude oil October futures fell 2%. These oil-weighted stocks are from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). The stocks operate with a minimum production mix of 60% in oil.
Oil-weighted stocks that outperformed their peers in the trailing week were:
California Resources and Kosmos Energy had positive, but weak correlations with oil prices during this period. In fact, California Resources had the lowest correlation with oil prices among oil-weighted stocks in the seven calendar days to August 28, 2017.
Oil-weighted stocks such as Denbury Resources (DNR), Carrizo Oil & Gas (CRZO), and Murphy Oil (MUR) fell 8.3%, 7.1%, and 1.8%, respectively, in the trailing week and underperformed their peers. During this period, these three oil-weighted stocks had correlations of above 60% with oil prices.
Apart from the correlations with oil prices, fluctuations in the broader markets could also be important for these upstream stocks.
Returns since last year
From February 11, 2016, and August 28, 2017, US crude oil active futures rose 77.7%. On February 11, 2016, US crude oil active futures fell to their 12-year low. However, the United States Oil Fund LP (USO), which tracks US crude oil active futures, rose 19.2% during this period. USO suffered a negative roll yield due to the shape of the futures forward curve.
Between these two dates, oil-weighted stocks rose 28.4%. So, oil-weighted stocks underperformed US crude oil active futures. Oil-weighted stocks that outperformed between these two dates were:
- Continental Resources at 76.2%
- Kosmos Energy at 71.1%
- Oasis Petroleum (OAS) at 63.9%
Oil-weighted stocks that underperformed between these two dates are:
- Denbury Resources at -6.5%
- Whiting Petroleum (WLL) at -12.2%
- Carrizo Oil & Gas at -45.8%