Have Oil-Weighted Stocks Diverged from Oil’s Fall?

Oil-weighted stocks’ returns

On October 31–November 7, our list of oil-weighted stocks rose 3.4%—compared to the 5.6% fall in US crude oil December futures. On average, our list of oil-weighted stocks outperformed US crude oil prices. In the previous part, we saw that most of these oil-weighted stocks had higher and positive correlations with the S&P 500 Index (SPY) than oil prices. In the trailing week, the S&P 500 Index (SPY) rose 3.8%.

Have Oil-Weighted Stocks Diverged from Oil’s Fall?

Broader market drove oil-weighted stocks higher

Below is the list of oil-weighted stocks that have risen the most in the trailing week:

  • Carrizo Oil & Gas (CRZO) rose 12%.
  • Callon Petroleum (CPE) rose 11.1%.
  • Occidental Petroleum (OXY) rose 9.9%.

Carrizo Oil & Gas and Callon Petroleum were among the top five oil-weighted stocks that had the highest correlations with the S&P 500 Index.

The oil-weighted stocks that declined the most in the trailing week were:

  • Whiting Petroleum (WLL) fell 0.3%.
  • California Resources (CRC) fell 6.4%.
  • Denbury Resources (DNR) fell 6.7%.

Denbury Resources had the second-highest positive correlation with US crude oil prices in the past five trading sessions.

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% in liquids based on the latest quarterly production data. Liquids include crude oil, condensates, and natural gas liquids.