Are Gas-Weighted Stocks Tracking the Fall in Natural Gas Prices?
Natural gas–weighted stocks
Between September 1 and September 11, 2017, our collection of natural gas–weighted stocks fell 3.1%, while natural gas October futures fell 3.9%. Our collection of natural gas–weighted stocks include upstream stocks from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) that have a minimum 60% production mix in natural gas.
The natural gas–weighted stocks that fell the least during this period follow:
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These three natural gas–weighted stocks had higher correlations with US crude oil prices compared to natural gas. We discussed this topic in Part 3 and Part 4 of this series. In the past five trading sessions, US crude oil October futures rose 1.6%.
The natural gas–weighted stocks that fell the most during this period follow:
- Range Resources (RRC): fell 4.9%
- Southwestern Energy (SWN): fell 4.8%
- Gulfport Energy (GPOR): fell 3.9%
SWN and GPOR had the highest correlations with natural gas futures between September 1 and September 11, 2017. We highlighted this trend in Part 3 of this series.
Apart from the correlations with oil and natural gas, these natural gas–weighted stocks could also track the broader market’s movements.
Between March 3, 2016, and September 11, 2017, natural gas October futures rose 79.9%. On March 3, 2016, natural gas active futures closed at their 17-year low. During this period, the United States Natural Gas Fund LP ETF (UNG), which tracks natural gas futures, rose just 13% due to negative roll yield.
Our collection of natural gas–weighted stocks rose only 14% during this period. The gas-weighted stocks that outperformed during this period follow:
The natural gas–weighted stocks that underperformed their peers between these two dates follow:
To learn more about energy stocks, please visit Market Realist’s Energy and Power page.