Short interest in energy stocks is the highest since December 2020, S&P Global Market Intelligence said Wednesday. Short interest in energy stocks reached 3.49% in mid-February. Short sellers appeared to believe a rally in energy stocks was losing steam, said S&P Global. Loading Something is loading.
Investors have ramped up bets against energy company stocks, according to S&P Global Market Intelligence on Wednesday, moves that took place as Russia-Ukraine tensions propelled oil prices to seven-year highs.
The overall analysis “shows that short sellers seem to believe that the recent rally in energy stocks may be petering out, even with oil prices surging to their highest levels since 2014,” S&P Global said in a research note.
Short interest in energy stocks traded on major US exchanges was at 3.49% at mid-February. That rate was up about 50 basis points from the end of November and marked the highest level since the end of December 2020.
Coal miner Arch Resources was the most-shorted energy company and the second most-shorted company across sectors as of mid-February. Short interest was at 35.4%, climbing from 21.6% a year ago.
The S&P 500 energy group in mid-February had edged back from recent highs but it remained the strongest performing of the broader index’s 11 sectors this year.
Prices for West Texas Intermediate crude and Brent crude traded around $95 a barrel in mid-February, the highest since 2014, as Russia continued to amass thousands of troops at Ukraine’s border. Moscow reportedly denied it had planned to invade Ukraine but Russian President Vladimir Putin has expressed concern over the expansion of NATO into Eastern Europe and former Soviet Republics, especially Ukraine.
Russia began its invasion of Ukraine last week, sending WTI and Brent oil prices soaring beyond $100 a barrel a year for the first time in seven years. Brent oil, the international benchmark, traded above $113 a barrel on Wednesday and WTI fetched more than $111 a barrel.
Behind Arch Coal, renewable fuel and chemical producer Gevo and petroleum products refiner Vertex Energy were the second and third-most shorted energy stocks about two weeks ago, at 22.4% and 20.05%, respectively. The 10 most-shorted energy stocks had an average of 18.5% short interest in the middle of last month.
S&P Global said short sellers “appear to have little interest” in the S&P 500’s five largest energy stocks, which all have short interest below the S&P 500 average of 2.18%. Exxon Mobil had short interest of less than 1.2% as of mid-February.
The S&P 500 energy group this year has gained roughly 28% through intraday trade Wednesday, outstripping the S&P 500 index’s slump of more than 8%.
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