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Are Oil-Weighted Stocks and US Crude Oil Deviating?

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Returns

On March 28–April 4, 2018, our list of oil-weighted stocks rose 0.6%, while US crude oil May futures fell 1.6% during this period. In the seven calendar days to April 4, 2018, the oil-weighted stocks with the highest rise were:

  • California Resources (CRC) rose 6.6%.
  • Occidental Petroleum (OXY) rose 5.5%.
  • Hess (HES) rose 4.7%.

In the trailing week, the S&P 500 Index rose 1.5%. The equity market sentiment can help stocks rise despite underlying fundamental drivers.

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

  • RSP Permian (RSPP) fell 1.8%.
  • Oasis Petroleum (OAS) fell 2.6%.
  • WPX Energy (WPX) fell 4.6%.

These three oil-weighted stocks with the highest losses had correlations of more than 90% 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.

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February 2016

Between February 11, 2016, and April 4, 2018, US crude oil active futures rose 141.8% from their 12-year low. On average, these oil-weighted stocks rose 90.9% during this period.

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

  • WPX Energy gained 213.1%.
  • California Resources gained 186.7%.
  • Denbury Resources gained 163.1%.

The oil-weighted stocks with the least returns during this period were:

  • Hess (HES) rose 37.2%.
  • Occidental Petroleum (OXY) rose 11.6%.
  • Carrizo Oil & Gas (CRZO) fell 33%.
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