Oasis Petroleum Inc. (NYSE:OAS), Southwestern Energy Company (NYSE:SWN), and Freeport-McMoRan Inc (NYSE:FCX) are each considerably lower due to falling WTI prices, which are currently down by 2.66%.
Due to the regional rivalry between it and Saudi Arabia, Iran has refused to go along with a freeze, insisting that it would like to be allowed to produce 4.1 to 4.2 million barrels a day (from the current 3.6 to 3.8 million barrels per day) before agreeing to any freeze. Some traders think that some other nations, such as Libya and Nigeria, may also want some exemptions due to their currently depressed levels of production due to geopolitical troubles.
Once the lead proponent of increasing production to maintain market share, Saudi Arabia is now more on the freeze/cut side given that Saudi Aramco’s IPO would do better if crude prices were higher. The fat lady hasn’t sung just yet for a potential freeze, as OPEC will meet in November next. Both Oasis and Freeport-McMoRan would make less revenue if WTI prices fell. Southwestern Energy is also affected by the fall in crude prices because NGL prices are correlated with crude.
In terms of general hedge fund activity in the names, the smart money was pretty bullish on Southwestern Energy in the second quarter, as our data show the number of investors with holdings in the natural gas producer rose by 20 quarter-over-quarter to 48 at the end of June. Meanwhile, the number of funds long Oasis Petroleum Inc. (NYSE:OAS) went up by four to 33 during the second quarter. The smart money went the opposite way with Freeport-McMoRan, as 30 funds had a bullish position in the copper/oil producer at the end of the second quarter, down by four funds from the previous quarter.