These Oil-Weighted Stocks Diverged from Oil’s Decline


Mar. 8 2018, Updated 4:15 p.m. ET


Between February 28 and March 7, our collection of oil-weighted stocks gained 3.1%, compared to a 0.8% decline in US crude oil April futures. All the oil-weighted stocks in our list belong to the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). The oil-weighted stocks with the highest gains in this period were:

  • Callon Petroleum (CPE), which rose 11%
  • Continental Resources (CLR), which rose 7.5%
  • Denbury Resources (DNR), which rose 5%

The oil-weighted stocks with the biggest declines over this period were:

  • Occidental Petroleum Corporation (OXY), which fell 0.6%
  • Murphy Oil Corporation (MUR), which fell 0.7%
  • California Resources (CRC), which fell 1%

CPE, CLR, and DNR had over 60% correlations with US crude oil April futures in the trailing week, as we highlighted in Part 1 of this series. In fact, these three oil-weighted stocks had closed in the red on March 7, followed by the downfall in oil prices. However, this fall wasn’t enough to push CPE, CLR, and DNR’s trailing week returns into the negative territory. US crude oil closed higher for the last three trading sessions prior to March 7.

CRC stocks prices could have ignored oil’s movement based on the stock’s trailing week correlations with oil prices. All these oil-weighted stocks have at least a 60% production mix in oil.

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February 2016

Between February 11, 2016, and March 7, 2018, US crude oil active futures rose 133.3% from their 12-year low. Our list of oil-weighted stocks rose 72.8% in this period.

The oil-weighted stocks that rose the most over this period were:

  • Continental Resources (CLR), which rose 172.2%
  • California Resources, which rose 128.9%
  • Denbury Resources, which rose 123.3%

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

  • Hess (HES), which rose 24.4%
  • Occidental Petroleum (OXY), which rose 7.8%
  • Carrizo Oil & Gas, which fell 37.4%

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