WTI Oil’s Struggle: Which Oil-Weighted Stocks Should You Watch?



Oil prices

On July 18, US crude oil September futures rose 0.9% and closed at $67.75 per barrel. In the last three trading sessions, US crude oil September futures have been struggling to close above the $68.00 mark.

The upside for US crude oil prices was limited by several events on July 16, including Treasury Secretary Steven Mnuchin’s statement that the United States might consider waivers for countries importing oil from Iran. Also, the Wall Street Journal reported that some European nations are exploring ways to keep financial channels open with the Iranian Central Bank, given the subdued crude prices.

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In the last trading session, the EIA reported a rise of 5.8 MMbbls (million barrels) in US crude oil inventories for the week ended July 13. The market had expected a fall of 3.0 MMbbls in oil inventories based on the S&P Global Platts. The inventories number turned bearish, and US crude oil production also climbed to a new record of 11.0 MMbpd (million barrels per day) last week, after holding steady for five consecutive weeks.

On the downside, the 100-day moving average at $67.07 is expected to be important for US crude oil prices. If oil prices break this level decisively, a further downside could be possible.

Oil-weighted stocks

Considering the possibility of a further fall in US crude oil prices, which stocks could be affected in the short term? The following oil-weighted stocks could be sensitive to oil’s movements based on their past five trading sessions’ correlations with US crude oil September futures:

  • Denbury Resources (DNR): 98.6%
  • Hess Corporation (HES): 96.2%
  • Whiting Petroleum (WLL): 95.7%
  • Oasis Petroleum (OAS): 94.4%
  • WPX Energy (WPX): 88.1%

California Resources Corporation (CRC) and Callon Petroleum Company (CPE), the remaining oil-weighted stocks on our list, have had correlations of at least 54.0% with US crude oil September futures in the last five trading days. CRC and CPE had correlations of 15.7% and 14.4%, respectively, with US crude oil futures in this period.

DNR fell the most among the oil-weighted stocks in the trailing week. US crude oil futures fell 1.6% in this period. 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 60.0% in liquids based on their latest quarterly production data. Liquids include crude oil, condensates, and natural gas liquids.


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