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Oil-Weighted Stocks Could Be Impacted by Oil’s Fall

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US crude oil

On April 4, 2018, US crude oil May futures fell 0.2% and closed at $63.37 per barrel.

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 Inventory data

In the week ending March 30, US crude oil inventories fell by 4.6 MMbbls (million barrels)—compared to the market’s expected rise of 1.4 MMbbls. The EIA (U.S. Energy Information Administration) released its inventory report for last week on April 4, 2018. Gasoline inventories fell by 1.1 MMbbls for the same week.

However, we have another weekly record for US crude oil production. In the week ending March 30, 2018, the US crude oil weekly production rose by 27,000 barrels per day to 10.46 MMbpd (million barrels per day), which could have dragged oil prices on April 4, 2018.

Oil-weighted stocks

On March 28–April 4, 2018, US crude oil May futures fell 1.6%.

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

  • Hess (HES) at 99.7%
  • Murphy Oil (MUR) at 99.1%
  • California Resources (CRC) at 98.9%
  • Diamondback Energy (FANG) at 98.6%
  • Denbury Resources (DNR) at 98.2%

None of the oil-weighted stocks had a correlation of less than 65% with US crude oil May futures in the trailing week.

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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