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US Crude Oil Loses Momentum, Oil-Weighted Stocks Might Fall

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US crude oil

On March 28, 2018, US crude oil May futures declined 1.3% and closed at $64.38 per barrel. US crude oil futures could have fallen due to profit-booking. The US dollar rose 0.8% on March 28, 2018. A stronger dollar could drag oil prices. In the past three trading sessions, US crude oil May futures’ closing prices were in a descending order. During this period, US crude oil May futures didn’t close over the $66 level. On March 28, 2018, US crude oil May futures slipped below the $65 level.

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Inventory data

In the week ending March 23, US crude oil inventories rose by 1.6 MMbbls (million barrels)—compared to the market’s expected rise of 0.5 MMbbls. The EIA (U.S. Energy Information Administration) released its “Weekly Petroleum Status Report” for the week ending March 23, 2018, on March 28, 2018.

The rise in US crude oil inventory levels was more than the market’s expected rise. The rise in the EIA’s data was smaller than the API’s (American Petroleum Institute) reported of an increase by 5.3 MMbbls (million barrels) on March 27, 2018. Gasoline inventories fell by ~3.5 MMbbls for the week ending March 23, 2018—approximately 1.5 MMbbls more than the market’s expected fall.

Oil-weighted stocks

The oil-weighted stocks that could be impacted the by any changes in oil prices based on the trailing week’s correlations with US crude oil May futures were:

  • Murphy Oil (MUR) at 65.3%
  • California Resources (CRC) at 61.3%
  • Occidental Petroleum (OXY) at 43.8%
  • Denbury Resources (DNR) at 43.5%
  • Whiting Petroleum (WLL) at 42.4%

These five oil-weighted stocks closed in the red during this period. On March 21–28, 2018, US crude oil May futures fell 1.2%.

The oil-weighted stocks that could be inversely related to oil prices based on the trailing week’s correlations with US crude oil May futures were:

  • Callon Petroleum (CPE) at -31.9%
  • RSP Permian (RSPP) at -43.7%

Callon Petroleum and RSP Permian were the only oil-weighted stocks that closed in the green in the past five trading sessions. Next, we’ll discuss these oil-weighted stocks’ returns.

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.

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