These Stocks Closely Track Crude's Movement When Oil Spikes

It might be a good idea to look at stocks that are highly correlated to crude oil if you want to trade the recent move in oil.

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A report from OPEC+ announcing a production cut of more than 1 million barrels per day has sent West Texas Intermediate futures up more than 6% this week. Additionally, that would be the first time crude has won three consecutive weeks since December.

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Inflation could rise with higher oil prices and global central banks may be forced to maintain rate elevations for longer than expected. The stock market could be negatively affected by this. Some companies, however, could benefit from it as well.

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To determine which names tend to follow oil the closest, CNBC Pro examined the 100-day rolling correlations between S&P 500 stocks and West Texas Intermediate futures. The names that had a current correlation of 0.5 or more were selected for screening. Moreover, we searched for stocks with an average correlation of 0.5 or higher going back to 2015. WTI's 1% move would translate into a 0.5% gain on the stock with a 1% move on the market.

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Oil-Related Stocks

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• Marathon Oil Corporation

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• ConocoPhillips

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• Hess Corporation

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• EOG Resources, Inc.

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• Halliburton Company

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• Devon Energy

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• Corporation

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• Schlumberger N.V.

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• APA Corporation

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• Occidental Petroleum

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• Corporation

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• Diamondback Energy, Inc.

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• Exxon Mobil Corporation

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• Chevron Corporation

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• Targa Resources Corp.

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As might be expected, energy stocks rank 13th in terms of positive correlation with oil. Therefore, when oil rises, these stocks tend to rise as well. Marathon Oil, Hess, and SLB all have higher correlation coefficients than APA, which has 0.67. In addition, Marathon and Hess, both of which have 0.57 and 0.61 correlation coefficients, are both up more than 5%, while APA is up more than 6%. In contrast, SLB has gained 2.7%.

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The rise in crude oil, however, tends to hurt some stocks. There is a negative correlation between Clorox's stock price and oil price at present. Consequently, these stocks have fallen when oil prices have risen. However, their average correlation over the past five years has been relatively flat.

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The shares of Clorox and General Mills are underperforming oil this week, with the former falling 0.1% and the latter gaining just 1.7%.

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There is no guarantee that correlations hold up, and individual stocks may trade differently based on idiosyncratic factors than commodities. Stocks and commodities are not exclusively correlated, so an investment thesis shouldn't be based on their correlation.

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