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An Important Note to Investors in Oil-Weighted Stocks

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Dec. 4 2020, Updated 10:52 a.m. ET

US crude oil

On July 3, US crude oil August futures rose 0.3% and closed at $74.14 per barrel—the second-highest closing level for active US crude oil futures since November 24, 2014. 

Between June 26 and July 3, US crude oil August futures rose 5.1%.

Because of the Independence Day holiday, exchanges were closed in the United States on July 4. On the same date, Brent crude active futures on the Intercontinental Exchange in London rose 0.6%.

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Oil-weighted stocks

Considering the momentum in US crude oil prices, which stocks could react in the short term? The following oil-weighted stocks could continue to be sensitive to oil’s movements based on their past five trading sessions’ correlations with US crude oil August futures:

  • Concho Resources (CXO): 94.2%
  • RSP Permian (RSPP): 93.2%
  • Diamondback Energy (FANG): 92.8%
  • California Resources (CRC): 97.7%
  • Carrizo Oil & Gas (CRZO): 74.1%

Among these oil-weighted stocks, the remaining stocks except CRZO ended in the green in the last five trading sessions. CRZO fell 0.3% in the period.

None of the oil-weighted stocks on our list have had correlations of less than 20% with US crude oil August futures in the past five trading days. In the next article, we’ll focus on these oil-weighted stocks’ returns.

All of these oil-weighted stocks are part of 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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