Where Natural Gas Prices Stand next to Oil Prices



Last five trading sessions

Between October 11 and October 18, 2017, natural gas (GASL) (GASX) active futures had a correlation of -53.1% with US crude oil (USO) (DBO) futures. In fact, during this period, US crude oil (OIIL) (USL) (DBO) futures rose 1.3%, while natural gas futures fell 1.2%.

Over this short-term period, the moves were sufficient to push the statistical relationship between natural gas and crude oil into negative territory.

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However, based on the 30-day rolling basis as of October 18, the correlation between natural gas and crude oil is positive, though at a weak 25.7%. The 30-day rolling correlation between natural gas and US crude oil was positive between May to July 2017, and at most times crossed above 30%. This could hint at a positive relationship between these two energy commodities.

Meanwhile, the geopolitical tension in Iraq and the fall of 5.7 MMbbls (million barrels) in US commercial crude oil stockpiles for the week ended October 13, 2017, could have supported oil prices lately.

Oil prices can also indirectly influence natural gas prices. In fact, on a short-term basis, natural-gas-weighted stocks such as Range Resources (RRC), Southwestern Energy (SWN), and EQT (EQT) can show higher correlations with oil compared with natural gas.

For key energy updates, keep checking in with Market Realist’s Energy and Power page.


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