Have Oil-Weighted Stocks Outdone Oil Prices?

Rabindra Samanta - Author

Jan. 17 2019, Updated 12:00 p.m. ET

Oil-weighted stocks’ returns

On January 9–16, our list of oil-weighted stocks fell 1%—compared to the 0.1% fall in US crude oil February futures. On average, our list of oil-weighted stocks underperformed US crude oil prices.

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Oil boosts oil-weighted stocks

Let’s take a look at the oil-weighted stocks that have outperformed their peers and oil prices in the last five trading sessions:

  • Hess (HES) rose 2.2%.
  • Apache (APA) rose 1.1%.
  • Whiting Petroleum (WLL) rose 0.7%.

In the trailing week, Hess and Whiting Petroleum had correlations of more than 66% with US crude oil February futures, which we discussed in the previous part. On January 10, Hess rose 3.6%, which might be behind its rise during this period. On the same day, Barclays increased its rating on Hess from equal-weight to overweight. In the seven calendar days to January 16, Apache had a negative correlation with US crude oil futures.

Now, let’s look at the oil-weighted stocks that underperformed their peers in the last five trading sessions:

  • Callon Petroleum (CPE) fell 2.6%.
  • Denbury Resources (DNR) fell 2.7%.
  • Carrizo Oil & Gas (CRZO) fell 6.3%

Callon Petroleum and Denbury Resources had the first and fourth-highest positive correlation with oil prices in the past five trading sessions. Carrizo Oil & Gas had correlations of more than 47% with oil prices during this period.

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.


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