Are Natural Gas–Weighted Stocks Following Natural Gas Returns?
Natural gas–weighted stock movement
Between July 17 and 24, 2017, natural gas–weighted stocks on average fell 2.9% compared to a plunge of 4.2% in natural gas active futures. Natural gas–weighted stocks such as Rice Energy (RICE), WPX Energy (WPX), and EQT (EQT) rose 2.6%, 2.5%, and 1.5% during this period. These three stocks outperformed their peers. In fact, RICE and EQT had negative correlations with natural gas as well as crude oil futures in the trailing week. We discussed these things in parts 3 and 4 of this series. In the last five trading sessions, crude oil prices were up 0.2%.
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Antero Resources Corporation (AR), Southwestern Energy (SWN), and Range Resources (RRC) fell 5.1%, 7.4%, and 9.2% and underperformed natural gas– and gas-weighted stocks in general between July 17 and 24, 2017. However, these three stocks had higher correlations with oil compared to natural gas prices in the trailing week.
Returns since 2016
On March 3, 2016, natural gas active futures plunged to their 17-year lowest closing price. Since then, natural gas futures have recovered 75.6%. But natural gas–weighted stocks rose only 19.9%.
The top three gainers among gas-weighted stocks since the historic low include Rice Energy (RICE), WPX Energy (WPX), and Cabot Oil & Gas (COG). These three stocks rose 174.1%, 96%, and 12.4%, respectively.
On the other hand, the top three losers among gas-weighted stocks since the 17-year low include Southwestern Energy (SWN), Range Resources (RRC), and Gulfport Energy (GPOR). These three stocks fell 23.2%, 33.3%, and 49%, respectively.
So, since March 3, 2016, natural gas was the outperformer, but in the trailing week, natural gas–weighted stocks outdid natural gas futures.
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