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Why are WDS and OOO looking so different?

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Why are WDS and OOO looking so different?

Hi James, Looking at the performance of WDS and OOO (since June last year) they are quite different and yet, as I understand it, they are should both be loosely (?) linked to the price of oil. WDS has 'sort of' gone up but OOO has tanked. To use your rubber band analogy, should we be favouring OOO over WDS? Why this discrepancy? cheers Alain


Hi Alain,

Woodside is an energy producer with a diverse set of assets producing earnings, the BetaShares Crude Oil Index ETF (OOO) owns oil futures, more inherently linked to the oil price but is currency hedged, which we don’t like for a commodity linked ETF. WDS is up over +10% over the last 12-months plus its paid $US2.53 in fully franked dividends, a good return considering the weak oil price. Over the same period the OOO  has fallen over 40%, as you say no correlation there!

  • Woodside Energy (WDS) – Woodside has significantly outperformed the energy complex since buying BHP’s Petroleum business, which was a great acquisition and gives WDS much needed scale. We also expect them to pay nearly 7% in fully franked dividends this year which is obviously very supportive of the stock. We are long and bullish.
  • BetaShares Crude Oil Index ETF (OOO) – The index which OOO aims to track provides exposure to the price of West Texas Intermediate (WTI) crude oil futures, hedged for currency exposure, so the fall in the AUD (rise in the USD) has not helped whereas WDS is a natural beneficiary of a weaker AUD as they generate USD earnings.  The price of oil has obviously been smacked on recession fears hence the logical decline in the ETF. We believe oil is “looking for a low” hence traders might consider accumulating into a spike below $US70/barrel by oil –  we may add to our WDS position in such an eventuality.
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Woodside Energy Group Ltd (WDS)
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