Oil-weighted stocks are sensitive to oil
The following oil-weighted stocks could be sensitive to oil’s price movements based on their correlations with US crude oil August futures on June 19–26:
- Carrizo Oil & Gas (CRZO) at 95.5%
- Pioneer Natural Resources (PXD) at 88.6%
- Occidental Petroleum (OXY) at 85%
- Apache (APA) at 83.6%
- Callon Petroleum (CPE) at 83.4%
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.
Concho and Denbury bucked oil’s rise
In the trailing week, US crude oil August futures rose 10%. The magnitude of the correlation shows oil’s significance for these energy stocks. If US crude oil rises more, it might please investors in the stocks discussed above based on the correlations. All of the oil-weighted stocks except Concho Resources (CXO) and Denbury Resources (DNR) ended in the green. Concho Resources was unchanged, while Denbury Resources fell 0.8%. Concho Resources had the second-least correlation with oil prices.
On June 20, UBS reduced its target price on Concho Resources by $15 to $161. On June 19, Susquehanna reduced its target price by $7 to $143. On July 31, Concho Resources is scheduled to release its second-quarter earnings results. Based on analysts’ consensus estimates, Concho Resources’ EPS might rise 22.2% on a sequential basis. On June 20, UBS also reduced its target price on Denbury Resources by $0.5 to $1.7. On June 24, Denbury Resources’ stock prices fell 8.3%, while oil prices rose 0.8%.