Short sellers bet against energy stocks amid oil volatility
Yahoo Finance's Alexandra Semenova discusses short interest in energy stocks as oil prices rise.
Video transcript
BRIAN SOZZI: Short sellers reportedly boosted their bets against energy stocks as oil prices soared earlier this month. Yahoo Finance's Alexandra Semenova has been tracking this story for us. Alex.
ALEXANDRA SEMENOVA: Well, Brian, oil prices have seen some wild swings in recent weeks, but remain elevated overall and are giving the energy sector a nice boost this year. Many on Wall Street have even predicted that oil and gas companies have more room for upside amid the sustained surge in energy prices. But even as oil rallied and energy stocks rose, a growing number of investors have bet that the days of $100 a barrel oil are likely to be short-lived.
Short interest in energy stocks increased 70 basis points from November 2021 through the end of February, according to a report from S&P Global Market Intelligence. This put short interest in energy stocks at 3.7% as of the end of last month, which is the highest level since November 2020. By comparison, short interest in the S&P 500 was up only 14 basis points since the end of 2021 through February. And these bets against energy companies come at a time where oil prices have been on a winning streak and energy stocks have largely outperformed the S&P 500.
As we know, oil rose above $130 a barrel last week, hitting the highest level since 2008 on worries that sanctions against Russia could disrupt energy supplies. But even before the crisis in Ukraine, oil price futures were well on their way up since the end of last year. Short sellers focused specifically on oil and gas refining and marketing companies with short interest in those stocks, averaging about 7.3% as of the end of February. Coal and consumable fuels companies came in second at 6.3%, and oil and gas drilling companies at 5.1%.
So as investors wonder what is next for energy, the main question isn't necessarily how much higher oil prices will go up or whether they've peaked and will fall. It's really a question of how long these current prices can be sustained and once-- what that means once we see a larger pullback in oil. Brian.
