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Which Energy Stocks Could Take Advantage of Oil's Rise?

PART:
1 2 3 4 5
Part 3
Which Energy Stocks Could Take Advantage of Oil's Rise? PART 3 OF 5

Natural Gas: Weakness Impacts Gas-Weighted Stocks

Natural gas

On September 25, 2017, natural gas (UNG) (BOIL) November futures fell 1.1% and closed at $2.99 per MMBtu (million British thermal units). On September 18–25, 2017, natural gas November futures fell 6.5%. The EIA’s (U.S. Energy Information Administration) bearish natural gas inventory data could be behind the fall in natural gas prices.

Natural Gas: Weakness Impacts Gas-Weighted Stocks

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During this period, the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) fell 0.3% and 0.2%. US crude oil (USL) prices rose 3.7% during this period. Energy prices could be vital drivers for these equity indexes.

Natural gas–weighted stocks

In the trailing week, except Antero Resources (AR), other natural gas–weighted stocks had negative correlations with natural gas prices. These natural gas–weighted stocks are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). These stocks operate with a production mix of a minimum of 60% in natural gas.

Natural gas–weighted stocks that had the most positive or least negative correlations with natural gas prices during this period are:

  • Antero Resources (AR) at 2.5%
  • Range Resources (RRC) at -4.9%
  • Southwestern Energy (SWN) at -8.1%
  • EQT (EQT) at -16.7%
  • Rice Energy (RICE) at -23.1%

Except for Antero Resources, the other natural gas–weighted stocks closed in the green in the trailing week. In the next part, we’ll discuss why these stocks outperformed.

Below is the list of natural gas–weighted stocks that had the most negative correlations with natural gas prices:

  • WPX Energy (WPX) at -43.4%
  • Cabot Oil & Gas (COG) at -43.5%

WPX Energy outperformed other gas-weighted stocks in the trailing week. In the next part, we’ll focus on natural gas–weighted stock returns.

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