Which Oil­-Weighted Stocks Might Trouble Investors?

Oil prices

On October 10, US crude oil November futures fell 2.4% and closed at $73.17  per barrel. Crude oil has struggled to settle above the $75 mark since October 4. In the last trading session, the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) fell 3.3% and 3.1%, respectively. On October 10, the Energy Select Sector SPDR ETF (XLE) fell 3.1%. Bearish sentiments might have led the broad fall in the market.

Which Oil­-Weighted Stocks Might Trouble Investors?

Oil­-weighted stocks might trouble investors

Considering the possibility of another fall in US crude oil prices because of broad bearish sentiments, 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:

  • Callon Petroleum (CPE) at 89.9%
  • Diamondback Energy (FANG) at 85.8%
  • Pioneer Natural Resources (PXD) at 82.7%
  • Concho Resources (CXO) at 76.8%
  • Denbury Resources (DNR) at 75.7%

In the trailing week, US crude oil November futures fell 4.2%. All of these oil-weighted stocks ended in the red during this period. Denbury Resources fell 9.5%—the fourth-highest fall among our list of oil-weighted stocks.

None of the oil-weighted stocks on our list had correlations of less than 59% with US crude oil futures in the seven days leading up to October 10. Whiting Petroleum (WLL) fell 19.8%—the most on our list during this period. Whiting Petroleum had a correlation of 70.2% with US crude oil prices.

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.