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Understanding Occidental’s Correlation with Crude Oil Prices

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Jun. 27 2018, Updated 11:00 a.m. ET

Occidental Petroleum’s stock performance

Occidental Petroleum’s (OXY) stock price was nearly flat in the week that ended on June 22. However, crude oil (SCO) rose sharply by 5.4% in the same week.

In this article, we’ll try to quantify any correlation between OXY and crude oil prices.

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Stock price correlations

In the week that ended on June 22, Occidental Petroleum’s stock price had a correlation of ~37% with crude oil’s price. In other words, movements in crude oil prices affected OXY’s price some of the time last week. Other oil-weighted stocks Energen (EGN), Marathon Oil (MRO), and Murphy Oil (MUR) had correlations of 91%, 73%, and -1%, respectively, with crude oil last week.

For the week that ended on June 22, Occidental Petroleum’s correlation with natural gas was 1%, meaning that movements in OXY’s price were indifferent to changes in natural gas prices.

Correlations over the last month

Occidental Petroleum stock had correlations of -18% and -19% with crude oil and natural gas prices, respectively, over the last month. Typically, OXY has a higher correlation with crude oil prices because its production mix contains ~67% crude oil.

However, for the last six weeks, OXY has been consolidating to release the overbought conditions brought on by the strong rise it has achieved since March. Due to this price consolidation, OXY’s correlation with crude oil prices has been negative over the last month.

Occidental Petroleum stock has a correlation of 88% with crude oil prices for the last year.

To read more on various energy stocks and their correlations with crude oil prices, read Market Realist’s Is Your Energy Portfolio Ignoring Steady Oil Prices?

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