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


Nov. 20 2020, Updated 5:07 p.m. ET

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.

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.

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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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