Oil and Gas Stocks Outperform Broader Market Amid Lower Prices

Strategic Insights -

Despite a 10 cents per barrel drop in the price of West Texas Intermediate (WTI) oil, stocks in the petroleum and gas industry outperformed the general stock market, with The Oil Daily 30 Composite index advancing 2.5% versus the Dow Jones Industrial Average's 1.9% gain. However, year-to-date figures show energy shares lagging behind, with the Dow up about 16%, roughly 5% ahead of oil and gas stocks. First-quarter earnings reports from major players like Amoco Corp., Chevron Corp., and Exxon Corp. will likely dictate investment activity this week.

Key Takeaways:

  • The Oil Daily 30 Composite index increased by 2.5% last week, while the Dow Jones Industrial Average rose by 1.9%.
  • Despite lower oil prices, oil and gas stocks outperformed the broader market, but are still lagging behind year-to-date.
  • First-quarter earnings reports from major oil and gas companies will influence investment decisions this week.
  • Calgary-based Computalog Ltd. led the way in percentage terms, with its shares jumping 19% following impressive fourth-quarter results.
  • The merger between Dallas-based Holly Corp. and Giant Industries Inc. to create a company with $1.4 billion in assets and 106,000 barrels per day (b/d) of refining capacity also boosted shares in both companies.
  • South Africa's Sasol Ltd. advanced 16% after agreeing to build a 20,000 b/d gas-to-liquids project in Nigeria with Chevron Corp.

Statistics:

  • The Oil Daily 30 Composite index increased by 2.5% last week.
  • The Dow Jones Industrial Average rose by 1.9% last week.
  • West Texas Intermediate (WTI) oil prices dropped by 10 cents per barrel.
  • Year-to-date, The Dow Jones Industrial Average is up 16%, while oil and gas stocks have increased by 5%.
  • Computalog Ltd.'s shares jumped 19% following impressive fourth-quarter results.
  • Holly Corp.'s shares rose by close to 19% after agreeing to merge with Giant Industries Inc.
  • Giant Industries Inc.'s shares leaped 15% to close at $20.813 after the merger agreement.

Sources:

  • The Oil Daily, April 20, 1998, p. 6
  • The Oil Daily, April 16, 1998, p. 3
  • The Oil Daily, April 16, 1998, p. 5