Oil Is Surging. Why Oil Stocks Are Down.

Exxon Mobil

(XOM) was down 2.4%,

Chevron

(CVX) dropped 1.9%, and oil producer

EOG Resources

(EOG) fell 2.2%.

BP

(BP), which has substantial operations in Russia, was down 8%. Oil services firm

Schlumberger

(SLB), which also does business in Russia, was down 6%.

Some energy investors were surprised by the move, because they expected the stocks to rally. But in general the consensus was that most stocks in the market were falling, and that energy was just part of the risk-off move. That’s especially true given that energy stocks were rising heading into the conflict. Hedge funds that had added them in recent weeks were suddenly compelled to lighten their load.

“What we think is happening is with volatility increasing, essentially all hedge funds are de-grossing across the board,” said David Heikkinen, a managing director at the Houston-based asset manager Pickering Energy Partners.

Investors who had been holding energy stocks in ETFs are selling, and that is hurting the underlying stocks, wrote Truist Securities analyst Neal Dingmann in an email.

Others said that the stocks were falling on general concerns about economic growth, which will lead to a drop in demand for energy.

“Energy stocks are struggling as financial markets are growing concerned over a more challenging growth and inflation environment for the consumer,” wrote Oanda analyst Edward Moya in an email.

Natural gas stocks were doing somewhat better. Those stocks were mixed but several rose as gas prices increased in the U.S. and Europe. Dutch-traded natural gas prices rose by about 60% at one point. Among the gainers were U.S. producer

Range Resources

(RRC), up 2.7% and

Southwestern Energy

(SWN), up 1.1%.

Write to Avi Salzman at avi.salzman@barrons.com