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Is Natural Gas Impacting XOP?

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US crude oil prices

On February 16, 2017, US crude oil (USO) (OIIL) (USL) (SCO) futures contracts for April delivery closed at $53.75 per barrel—an~0.3% rise compared to the previous trading session. Crude oil rose due to indications of OPEC extending the time period for its production cut deal.

From February 9, 2017, to February 16, 2017, US crude oil (USL) (OIIL) futures contracts for April rose 0.5%. OPEC’s record 90% compliance rate with pledged production cut targets supported oil prices—despite the large build in US oil inventories.

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Natural gas prices

Natural gas (UNG) March futures fell ~9.1% from February 9, 2017, to February 16, 2017. On February 16, 2017, natural gas active futures fell 2.4% due to bearish natural gas inventories data. Earlier in the week, higher temperatures had a negative impact on natural gas prices. We’ll discuss natural gas inventories in Part 3 of this series.

Performances of energy ETFs

Here’s how some energy ETFs performed from February 9, 2017, to February 16, 2017:

  • The Energy Select Sector SPDR ETF (XLE) fell 0.5%.
  • The Alerian MLP ETF (AMLP) rose 0.5%.
  • The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 1%.
  • The VanEck Vectors Oil Services ETF (OIH) rose 0.2%.

Understanding ETF performances

The fall in XOP corresponds to individual stock performances. Also, the large fall in natural gas could have negatively impacted gas-weighted stocks in XOP. We’ll discuss XLE’s performance in Part 4 of this series. AMLP and OIH’s price performance corresponds to the slight rise in oil prices. We’ll analyze the correlations between these ETFs and crude oil and natural gas in Part 5.

Sentiments related to natural gas and crude oil (SCO) also impact other ETFs including the ProShares Ultra Oil & Gas (DIG), the PowerShares DWA Energy Momentum ETF (PXI), the Vanguard Energy ETF (VDE), the iShares US Energy (IYE), and the Fidelity MSCI Energy ETF (FENY).

In the next part of this series, we’ll analyze the price performance of the United States Oil ETF (USO).

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