WTI crude oil has fallen to its lowest level in over three months. Logically, oil stocks should be suffering along with it, but $Occidental Petroleum(OXY.US) and $CNOOC(00883.HK) have barely moved, almost unaffected by the drop in oil prices. While oil prices are falling, oil stocks are holding up. Is this divergence because the market has already priced in weak expectations for oil prices, or is it that defensive positions underpinned by dividends have absorbed the funds during risk aversion? It looks more like the latter—when risk appetite shrinks, large-cap oil and gas stocks with stable cash flows and solid dividends have instead become a haven for funds to weather the storm.
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