Oil-Weighted Stocks at Maximum Risk, Oil Declines

Oil prices

On October 17, US crude oil November futures fell 3% and closed at $69.75 per barrel—below $70 for the first time since September 18. Bearish inventory data might be behind the downside in oil prices.

Oil-Weighted Stocks at Maximum Risk, Oil Declines

In the last trading session, the S&P 500 Index (SPY) was unchanged, while the Dow Jones Industrial Average Index (DIA) fell 0.4%. On October 17, the Energy Select Sector SPDR ETF (XLE) fell 0.6%. The fall might have limited the upside or been behind the fall in these equity indexes on the same day.

Which oil-weighted stocks to chase

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

  • Carrizo Oil & Gas (CRZO) at 99.3%
  • WPX Energy (WPX) at 96.3%
  • Callon Petroleum (CPE) at 95%
  • Denbury Resources (DNR) at 94.6%
  • Oasis Petroleum (OAS) at 90.7%

In the trailing week, US crude oil November futures fell 4.7%. Denbury Resources fell the most among our list of oil-weighted stocks during this period. Next, we’ll discuss these oil-weighted stocks’ returns.

Except for Occidental Petroleum (OXY), none of the oil-weighted stocks on our list had correlations of less than 65% with US crude oil futures in the seven days leading up to October 17. Occidental Petroleum had a negative correlation of 13.8% with US crude oil prices during this period.

All of these oil-weighted stocks are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). They operate with production mixes of at least 60.0% in liquids based on their latest quarterly production data. Liquids include crude oil, condensates, and natural gas liquids.