Oil prices in the month of September over the past 18 years show no significant trend, up or down. On average, the price of oil increases 0.56% in September (after large percentage gains in ’98, ’99, and ’07). Moving beyond this, we have compiled company profiles over September that do show great insight into how September oil prices influence various companies.
How do these price changes correlate with changes in the September price of crude oil? Here we examine Exxon Mobil (XOM), Chevron (CVX), Halliburton (HAL), Schlumberger (SLB), Transocean (RIG), and Nabors Industries (NBR):
Moves With Oil Prices | XOM | CVX | HAL | SLB | RIG | NBR |
When Oil Prices Increase | 7 of 9 | 5 of 9 | 4 of 9 | 4 of 9 | 5 of 9 | 6 of 9 |
When Oil Prices Decrease | 4 of 9 | 6 of 9 | 4 of 9 | 4 of 9 | 3 of 9 | 4 of 9 |
The greatest correlation with oil prices comes from XOM and CVX, two oil operators – both companies showing similar price changes with oil 11 out of 18 times.
Let’s take a look at what kind of gains we can expect when the price of oil increases:
When Oil Prices Increase | Oil | XOM | CVX | HAL | SLB | RIG | NBR |
Total Change | 62.39% | 29.77% | 17.06% | 20.86% | 8.33% | 44.62% | 35.69% |
Average Change | 6.93% | 3.31% | 1.90% | 2.32% | 0.93% | 4.96% | 3.97% |
We see here that when the price of oil increases in the month of September, it positively influences the prices of each of the companies studied. RIG and NBR both show the largest increases, with 5% and 4% increases, respectively. With XOM showing the greatest correlation, moving up with the price of oil 78% of the time.
Can we see similar, downward trends when oil prices decrease in September?
When Oil Prices Decrease | Oil | XOM | CVX | HAL | SLB | RIG | NBR |
Total Change | -52.32% | -9.21% | 14.62% | -25.68% | -0.71% | 37.00% | 25.18% |
Average Change | -5.81% | -1.02% | 1.62% | -2.85% | -0.08% | 4.11% | -2.80% |
We do see similar trends, but not as convincing when oil prices decrease. CVX and RIG still see price increases against the pressure for their prices to decrease.
Total Sept Change '93-'10 | Oil | XOM | CVX | HAL | SLB | RIG | NBR |
Total Change | 10.08% | 20.56% | 31.67% | -4.82% | 7.62% | 81.62% | 32.86% |
Average Change | 0.56% | 1.14% | 1.76% | -0.27% | 0.42% | 4.53% | 1.83% |
Overall, every company has seen positive trends in their prices over these periods, with HAL bucking the trend.
How do we use this information?
With oil prices fluctuating around the point we are at currently, it is hard to say where oil could go. If we see a QE3 released, there is no reason that the price of oil cannot increase, with good buys being seen in XOM, RIG, and NBR. If we see the price of oil decreasing, a good short could be in HAL or NBR. With the likelihood of prices staying stagnant, the trade on oil may be very range bound.
Currently, we like going long below $85, and we like going short as we near $90. You can also play these with UCO, SCO, and USO.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in UCO, SCO, USO over the next 72 hours.
