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Have Oil-Weighted Stocks Missed Oil’s Rise?

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Price performance and correlations

From November 20 to November 27, 2017, oil-weighted stocks rose just 0.5% on average, while US crude oil prices rose 3.0%. Collectively, these oil-weighted stocks missed oil’s rise. The oil-weighted stocks that rose the most in the trailing week are:

  • Callon Petroleum (CPE): 4.1%
  • Denbury Resources (DNR): 3.6%
  • Whiting Petroleum (WLL): 2.9%

CPE and DNR were among the oil-weighted stocks that had the highest correlations with oil prices, which we discussed in the previous part.

The oil-weighted stocks that underperformed in the past five trading sessions are:

  • Oasis Petroleum (OAS): -1.0%
  • Hess Corporation (HES): -1.1%
  • Carrizo Oil & Gas (CRZO): -2.5%
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In the seven calendar days ended November 27, 2017, CRZO had the lowest correlation with oil prices among our list of oil-weighted stocks. These stocks are from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). This selection also depends on these companies having at least 60% production in oil.

Apart from oil prices, these oil-weighted stocks also depend on the broader equity market sentiment.

Futures since 2016

Between February 11, 2016, and November 27, 2017, US crude oil active futures rose 121.4%. On February 11, 2016, US crude oil prices were at their 12-year low.

Among the ETFs that follow US crude oil, the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the United States Oil ETF (USO), and the United States 12-Month Oil ETF (USL) rose 68.2%, 45.1%, and 40.9%, respectively. Collectively, the oil-weighted stocks from XOP gained 67.2% from February 11, 2016, to November 27, 2017.

The oil-weighted stocks that were the top gainers during this period are:

  • California Resources (CRC): 143.8%
  • Continental Resources (CLR): 140.6%
  • Oasis Petroleum (OAS): 120.0%

The oil-weighted stocks that underperformed between February 11, 2016, and November 27, 2017, are:

  • Whiting Petroleum: 14.2%
  • Occidental Petroleum (OXY): 11.4%
  • Carrizo Oil & Gas (CRZO): -20.6%
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