USO appears oversold on the daily chart based on technical analysis but make no mistake, the relationship between SPY and oil is decoupling. USO is circling the event horizon (point of no return near a black hole) and will soon fall in. Not all energy stocks are oversold, and the S&P Energy Select ETF XLE ( XLE) represents energy producers and recently bounced off of lows.
Exxon Mobil ( XOM), ConocoPhillips ( COP), Marathon oil ( MRO), BP ( BP), Chesapeake Energy ( CHK), Sandridge Energy ( SD), Kodiak Oil & Gas ( KOG), Cheniere Energy ( LNG) profit from natural gas, oil and or refined product sales. All companies have international pricing-related exposure, and Europe is likely to continue to drag earnings, but at least provide greater margins. Transportation costs, current shipping lanes and lack of current demand for energy is a recipe for highly variable and localized energy costs. Exxon Mobil is currently trading near the 200-day moving average, after breaking below for the second time; first in May and now again in June. Also Kodiak, recently off 2012 lows after triggering an oversold signal a week ago, is running into technical analysis headwinds. Cheniere Energy bounced off the 200-day moving average last week, but appears ready to test 2012 lows soon again. ConocoPhillips is slightly weaker from the May 1 spin-off of Philips 66. Chesapeake Energy certainly has its share of news lately. Because natural gas prices are trading at yearly lows, a lot of volatility can be expected, especially in the near-term before demand ramps higher.
As oil prices move toward and below $75, natural gas prices will still remain very cheap relative to diesel and gas. Diesel and gas refinery operations, currently in high demand are keeping a greater share of the crack spread, keeping prices at the pump from falling. Refining limitations will distort the correlation between oil prices and pump prices, while natural gas continues to demonstrate price superiority. Natural gas production in North America gas tracked with United States Natural Gas ETF ( UNG) is part of the reason long-dated oil futures are trading at a discount relative to shorter term contracts. With so much energy available and natural gas at prices comparable to about half the cost of gasoline and diesel, it's just a matter of time before real meaningful conversion takes place.