Are Oil-Weighted Stocks Falling More than Oil?

On March 21–28, 2018, our list of oil-weighted stocks declined 2.1%—90 basis points more than US crude oil May futures’ decline during this period. In the seven calendar days to March 28, 2018, the oil-weighted stocks that outperformed were:

• RSP Permian (RSPP) rose 13.7%.
• Callon Petroleum (CPE) rose 1.1%.
• Carrizo Oil & Gas (CRZO) fell 1%.

RSP Permian and Callon Petroleum had negative correlations with US crude oil May futures in the trailing week. Except for Carrizo Oil & Gas, the other oil-weighted stocks on our list fell more than US crude oil May futures’ decline during this period.

The oil-weighted stocks with the largest fall in the trailing week were:

• WPX Energy (WPX) fell 5.4%.
• Oasis Petroleum (OAS) fell 6.4%.
• Concho Resources (CXO) fell 6.5%.

WPX Energy and Concho Resources had correlations of more than 35% with US crude oil May futures during this period.

All of these oil-weighted stocks are from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). They operate with a production mix of at least 60% in liquids based on their latest quarterly production data. Liquids include crude oil, condensates, and natural gas liquids.

Between February 11, 2016, and March 28, 2018, US crude oil active futures rose 145.6% from their 12-year low. On average, these oil-weighted stocks rose 90.3% during this period.

The oil-weighted stocks with the largest rise during this period were:

• WPX Energy gained 228.3%.
• California Resources gained 168.8%.
• Denbury Resources gained 158.3%.

The oil-weighted stocks that underperformed during this period were:

• Hess (HES) rose 31.1%.
• Occidental Petroleum (OXY) rose 5.8%.
• Carrizo Oil & Gas fell 32.4%.