Wednesday, October 30, 2013

Birds of a Feather Flock Together – Oil Stocks and Oil Prices


Crude oil prices seem to be the single most important determinant of oil companies’ performance. For this article, we ran some tests to find the correlation between Brent Crude prices and a few general performance indicators for oil companies. We found that oil prices do indeed affect oil companies’ performance to a great degree, but the extent to which they do so depends greatly on the companies’ positioning in the industry’s value chain.

For future reference, here’s a brief look at the how the industry is broadly categorized:

  • Exploration and Production (E&P) oil companies, which explore oil reserves and produce crude oil.
  • Refining and Marketing (R&M) companies, which refine crude oil and market it to end consumers.
  • Integrated Oil Companies (IOCs), which are involved in everything from the exploration and extraction activities, to transportation and marketing. Read More: APA, BP, CNQ, COP, CVX, ENI, HFC, MRO, RDS, TOT, TSO, VLO, XOM

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