5 Oct

How Natural Gas Follows Crude Oil Prices

WRITTEN BY Rabindra Samanta

Correlation for the trailing week

Between September 27–October 4, 2017, natural gas (UNG) (BOIL) active futures had a correlation of 40.7% with US crude oil futures. During this period, US crude oil (USO)(USL)(DBO) November futures fell 4.1%, and natural gas futures fell 4.0%.

In the trailing week, bearish weather forecasts were the major reason for the decline in natural gas prices. However, the fall in US crude oil prices could have followed a Reuters survey suggesting a rise in the OPEC output and the EIA data.

How Natural Gas Follows Crude Oil Prices

However, the high correlation between the two could indicate that sentiment from the crude oil market was driving sentiment across other energy markets such as natural gas.

The sentiment surrounding oil prices could be important for natural gas prices, which we discussed in Part 2 of this series. On a short-term basis, natural gas–weighted stocks such as Cabot Oil & Gas (COG) and Gulfport Energy (GPOR) also exhibit higher correlations with US crude oil compared to natural gas prices.

Correlations

From May to July 2017, the 30-day rolling correlation between natural gas and US crude oil was positive and frequently exceeded 30%. Natural gas prices were in a downturn during this period because of a mild summer. US crude oil prices also struggled to stay above the $50 mark due to rising global supply concerns during this period.

You can track our Energy and Power page for key energy updates.

Latest articles

This morning before the market opened, Tesla (TSLA) was trading on a negative note despite a sharp rise in index futures. As of 9:10 AM ET, Tesla stock had fallen 1.2% in the pre-market session to $234.74 after Goldman Sachs cut the target price on the company by about 21%.

The US-China trade war has already given a scare to Apple’s (AAPL) investors vis-à-vis the possibility of a 25% tariff on Apple goods being imported from its Chinese facilities. As a result, Apple might be considering shifting its plants out of China.

Yesterday, Greenlane Holdings (GNLN) fell a whopping 17.1%. The stock has now fallen 28% this month, and it hit its all-time low yesterday. Greenlane Holdings listed in April and priced its IPO at $17 per share. However, since the stock surged more than 25% after its listing, it has been a sorry story for Greenlane Holdings investors.

Yesterday, Mexico ratified the USMCA. The agreement was negotiated last year and would replace the 25-year-old NAFTA. The United States and Canada are yet to ratify the agreement. Renegotiating NAFTA was among Trump’s prominent campaign promises.

On June 20, Darden Restaurants (DRI) reported its fourth-quarter results. For the quarter ending May 26, the company posted an adjusted EPS of $1.76, which beat analysts’ expectation of $1.73.

20 Jun

GE Aviation Bags $55 Billion in Orders at the Paris Air Show

WRITTEN BY Mayur Sontakke, CFA, FRM

On June 20, GE Aviation published a press release stating that the company and CFM International had bagged $55 billion worth of new orders at the Paris Air Show—and with three more days to go before the closure of the show, there could be further additions to its orderbook.

172.31.16.229