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Are Oil-Weighted Stocks Rising More Than Oil?

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Short-term price performance

From October 23–30, 2017, the oil-weighted stocks we’re covering in this series rose 6%, which was 1.7 percentage points more than the gains of US crude oil (USO) (DBO) December futures in the same period.

Below are the oil-weighted stocks that outperformed US crude oil and their peers in this period:

  • Whiting Petroleum (WLL): 24.5%
  • Carrizo Oil & Gas (CRZO): 11.8%
  • Oasis Petroleum (OAS): 10.2%

WLL and CRZO had correlations of 93.6% and 97.2%, respectively, with oil prices in the trailing week. OAS had the highest correlation with oil prices over this period, as we saw in Part 1 of this series.

Below are the oil-weighted stocks that didn’t fare as well in the seven calendar days to October 30, 2017:

  • Concho Resources (CXO): rose 0.8%
  • Occidental Petroleum (OXY): fell 0.1%
  • Hess (HES): fell 3.4%

In addition to correlations with oil prices, the broader market movements are also crucial for these oil-weighted stocks.

All these stocks are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) based on a minimum 60% production mix in oil.

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12-year low

Between February 11, 2016, and October 30, 2017, US crude oil active futures rose 106.6% from their 12-year low. Over this time period, ETFs such as the ProShares Ultra Bloomberg Crude Oil (UCO), the United States Oil ETF (USO), and the United States 12 Month Oil ETF (USL) rose 48.2%, 36%, and 33.7%, respectively. These ETFs aim to track US crude oil futures. In this same time period, oil-weighted stocks rose 55.3%.

Below are the oil-weighted stocks that were the largest gainers between these two dates:

  • Continental Resources (CLR): 115.6%
  • Oasis Petroleum (OAS): 114.9%
  • Kosmos Energy (KOS): 95.5%

Below are the oil-weighted stocks that didn’t do very well between these two dates:

  • Denbury Resources (DNR): 12.6%
  • Occidental Petroleum (OXY): 6.3%
  • Carrizo Oil & Gas (CRZO): -27.5%

 

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