Is Oil Contributing to Natural Gas–Weighted Stocks’ Moves?



Natural gas–weighted stocks’ correlations with oil

Natural gas–weighted stocks that could move in tandem with US crude oil (USL) (DBO) active futures based on the correlations with oil prices on November 13–20, 2017, are:

  • Southwestern Energy (SWN) – 99%
  • Chesapeake Energy (CHK) – 96.4%
  • WPX Energy (WPX) – 95.9%
  • Range Resources (RRC) – 93.5%
  • Cabot Oil & Gas (COG) – 89.7%

These five stocks also had the highest correlations with natural gas prices.

EQT (EQT) had a correlation at 53.3% with oil prices in the trailing week. It was the natural gas–weighted stock that might escape oil’s moves. EQT also had the lowest correlation with natural gas prices during this period. Natural gas prices had a correlation of 97.8% with US crude oil prices in the past five trading sessions.

Our list of natural gas–weighted stocks is from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). The stocks needed to have production mixes of at least 60% in natural gas.

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Oil’s importance

Oil could be a key catalyst for natural gas and the whole energy sector. So, these natural gas–weighted stocks have shown a high correlation with oil prices—just like with natural gas prices during this period.


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