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With the price of oil falling dramatically lately, oil stocks have begun to significantly outperform the commodity. Below we highlight the historical ratio of oil stocks (S&P 500 oil & gas group) to the price of oil. When the line is rising, oil stocks are outperforming oil, and vice versa when the line if falling.

As shown below, as oil made its meteoric run earlier this year, the ratio got all the way down to its lowest levels since the early 1990s. As the commodity has fallen, however, the ratio has spiked to its highest levels since 2001. Now that the ratio has broken above its trading range from the last few years, there really isn't a ceiling on how high it can go. As we saw in the late 90s, oil stocks outperformed the commodity by a lot for a long time.

click to enlarge

Source: Oil Stocks Outperforming Oil