Natural gas leading the decline
For the week beginning October 2, 2017, natural gas (UNG) (BOIL) prices are leading the decline in energy commodities. Natural gas prices fell from last week’s close of $3.01 per mmBtu (million British thermal units) on September 29, 2017, to $2.89 per mmBtu on October 3, 2017, a fall of ~4.0% so far. Natural gas prices fell significantly on Monday, October 2 and moved below the 50-day moving average, which is currently $2.96.
All other energy commodities have also fallen in the current week. As of October 3, 2017, crude oil (USO) (USL) prices have fallen sharply by 2.4%. Last week, crude oil closed at $51.67 per barrel. On Tuesday, October 3, it was $50.42 per barrel.
Even unleaded gasoline (UGA) prices are falling this week after two weeks of consolidation. Those prices fell from last week’s closing price of $1.59 per gallon on September 29 to $1.57 per gallon on October 3, a 1.6% fall. Last week, on Friday, September 29, gasoline prices lost their 50-day and 200-day moving averages. However, gasoline’s 50-day moving average is above its 200-day moving average, which is a positive technical posture for gasoline. Gasoline and heating oil prices impact refining companies (CRAK).
Heating oil has also fallen more than 3.0% so far this week. As of October 3, 2017, heating oil closed at $1.75 per gallon.
Despite the strong decline in natural gas and crude oil, the energy sector is almost flat this week. As of October 3, the Energy Select Sector SPDR ETF (XLE), which represents an index of stocks across the energy sector, fell marginally by 0.13%.
The rising stocks in XLE are Pioneer Natural Resources (PXD), Concho Resources (CXO), Newfield Exploration (NFX), Phillips 66 (PSX), and Range Resources (RRC). These stocks have risen 3.7%, 2.8%, 2.4%, 2.2%, and 2.2%, respectively, this week.
The falling stocks in XLE are Helmerich and Payne (HP), Hess (HES), Halliburton (HAL), Kinder Morgan (KMI), and National Oilwell Varco (NOV). These stocks have fallen 4.0%, 2.6%, 2.4%, 1.7%, and 1.7%, respectively, this week.
In general, for the week starting October 2, 2017, XLE is underperforming the SPDR S&P 500 ETF (SPY). As of Tuesday, October 3, SPY has risen 0.65% so far this week.
In this series
Having analyzed the performance of the broader energy sector in the current week, we’ll now move on to look at the performances of energy subsectors. Specifically, we’ll look at the gainers and losers from the upstream and oilfield services sectors. We’ll also try to analyze any news or developments behind the moves.
Let’s start with the upstream gainers this week.