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Crude Oil Fell: Is There More Risk for Energy Stocks?

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Part 4
Crude Oil Fell: Is There More Risk for Energy Stocks? PART 4 OF 5

Which Gas-Weighted Stocks Could Follow Oil’s Moves?

Correlation with oil prices

On August 21–28, 2017, WPX Energy (WPX) had the highest correlation of 83.3% with US crude oil active futures among natural gas–weighted stocks.

Which Gas-Weighted Stocks Could Follow Oil’s Moves?

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Other natural gas–weighted stocks that had high correlations with crude oil prices during this period are:

  • Chesapeake Energy (CHK) – 78.4%
  • Range Resources (RRC) – 54.9%
  • Gulfport Energy (GPOR) – 29.9%
  • Rice Energy (RICE) – 24.6%

Natural gas–weighted stocks that had the most negative correlations with crude oil (USL) prices in the last five trading sessions are:

  • Antero Resources (AR) at -22.7%
  • Southwestern Energy (SWN) at -48%

These natural gas–weighted stocks are from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). These stocks operate with a minimum production mix of 60% in natural gas.

Why is crude oil important for natural gas stocks?

Crude oil is important for the whole energy sector. Apart from many of these companies producing some crude oil or crude oil–related products, natural gas prices are also often impacted by oil prices. Most of these natural gas–weighted stocks had higher correlations with oil prices compared to natural gas. However, natural gas prices are important for these gas-weighted stocks over the long term.

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