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Why Rise in Oil Could Be Necessary for Energy Stock Momentum

PART:
1 2 3 4 5
Part 3
Why Rise in Oil Could Be Necessary for Energy Stock Momentum PART 3 OF 5

Natural Gas Drops below $3: Which Gas-Weighted Stocks Could Fall?

Natural gas

On October 2, 2017, natural gas (UNG) (BOIL) (FCG) November futures closed at $2.92 per MMBtu (million British thermal units), 3% down from the last trading session. Between September 25 and October 2, 2017, natural gas futures fell 2.4%. A bearish weather outlook for this week as well as through December 2017 could be behind this fall.

Natural Gas Drops below $3: Which Gas-Weighted Stocks Could Fall?

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In the trailing week, the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) rose 1.3% and 1.2%. US crude oil (USL) futures fell 3.1% during this time period. Energy prices in the red could impact these equity indexes negatively.

Natural gas-weighted stocks

In the trailing week, all natural gas-weighted stocks on our list had negative correlations with natural gas prices. These natural-gas-weighted stocks operate with a minimum 60% production mix in natural gas. These stocks are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

Natural-gas-weighted stocks that had negative correlations with natural gas prices in the past five trading sessions are:

  • WPX Energy (WPX) at -6.5%
  • EQT (EQT) at -15.1%
  • Cabot Oil & Gas (COG) at -16.5%
  • Rice Energy (RICE) at -18.9%
  • Chesapeake Energy (CHK) at -21.8%

Natural-gas-weighted stocks that had the most negative correlations with natural gas prices in the trailing week are:

  • Range Resources (RRC) at -34.6%
  • Antero Resources (AR) at -50.6%

In the next part, we’ll discuss natural-gas-weighted stocks that have the highest correlations with oil prices.

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