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Crude Oil and Natural Gas Diverge: The Impact on Energy Stocks

PART:
1 2 3 4 5
Part 3
Crude Oil and Natural Gas Diverge: The Impact on Energy Stocks PART 3 OF 5

Natural Gas above $3: Which Gas–Weighted Stocks Could Gain?

Natural gas

On September 1, natural gas (UNG) October futures closed at $3.07 per MMBtu (million British thermal units). On the same day, natural gas prices rose 1%. Between August 25 and September 1, natural gas futures rose 5% because of the bullish inventory report by the EIA (US Energy Information Administration) on August 31.

Natural Gas above $3: Which Gas–Weighted Stocks Could Gain?

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Last week, the S&P 500 Index (SPY) gained 1.4%. The Dow Jones Industrial Average Index rose 0.8% during this period. These equity indexes have some allocations to the energy sector.

Correlations

The natural gas–weighted stocks that could track natural gas’s rise based on recent high correlations are as follows.

  • Antero Resources (AR) at 91.5%
  • Southwestern Energy (SWN) at 91%
  • Cabot Oil & Gas (COG) at 85.2%
  • EQT Corp (EQT) at 79.4%
  • Gulfport Energy (GPOR) at 78.7%

The natural gas–weighted stocks that had the lowest correlations with natural gas prices in the last five trading sessions are as follows.

  • Range Resources (RRC) at -17 %
  • Chesapeake Energy (CHK) -26.8%

All of these natural gas–weighted stocks are constituents of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) with minimum production mixes of 60% in natural gas.

In the next part of this series, we’ll analyze the correlations of these natural gas–weighted stocks with crude oil prices.

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