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Crude Oil above $50: Which Energy Stocks Could Benefit?

PART:
1 2 3 4 5
Part 5
Crude Oil above $50: Which Energy Stocks Could Benefit? PART 5 OF 5

How Gas-Weighted Stocks Could Benefit from Natural Gas’s Rise

Energy stocks

Between September 11 and September 18, 2017, natural gas–weighted stocks rose 7.9% compared to the 6.6% increase in natural gas October futures. Natural gas trading above the psychologically important level of $3 could be an important driver for the profits of these gas-weighted stocks.

How Gas-Weighted Stocks Could Benefit from Natural Gas’s Rise

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

Natural gas–weighted stocks that outperformed in the trailing week follow:

  • Range Resources (RRC): 12.9%
  • Chesapeake Energy (CHK): 11.6%
  • Southwestern Energy (SWN): 5.0%

RRC and SWN had higher correlations with natural gas compared to oil prices, which we discussed in Part 3 and Part 4 of this series. Between September 11 and September 18, 2017, US crude oil November futures rose just 3.6%. Natural gas almost doubled during the same period.

Natural gas–weighted stocks that underperformed in the trailing week follow:

  • Cabot Oil & Gas (COG): 1.9%
  • Antero Resources (AR): 4.7%
  • Rice Energy (RICE): 5.2%

These three stocks had higher correlations with oil compared to natural gas prices in the last five trading sessions.

Price performance since natural gas’s 17-year low

Between March 3, 2016, and September 18, 2017, natural gas active futures rose 91.8% compared to a 22% rise in these natural gas–weighted stocks. On March 3, 2016, natural gas active futures settled at their 17-year low.

However, the United States Natural Gas Fund LP ETF (UNG), rose just 20.2% between these dates due to the negative roll yield. UNG tracks natural gas futures.

Natural gas–weighted stocks that outperformed during this period follow:

  • Rice Energy (RICE): 186.2%
  • WPX Energy (WPX): 104.8%
  • Cabot Oil & Gas (COG): 20.5%

Natural gas–weighted stocks that underperformed during this period follow:

  • Southwestern Energy (SWN): -17.8%
  • Range Resources (RRC): -37.4%
  • Gulfport Energy (GPOR): -46.7%

To learn more about energy stocks, please visit our Energy and Power page.

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