Natural gas prices

On January 17, 2018, natural gas (UNG) (BOIL) February futures rose 3.3% and settled at $3.23 per MMBtu. The market expects a fall of 201 Bcf (billion cubic feet) in natural gas inventories for the week ended January 12, 2018. This fall is pushing natural gas inventories further below their five-year average, a bullish sign for natural gas prices. So, natural gas prices could gain if the EIA reports a similar fall in natural gas inventories on January 18, 2018.

These Gas-Weighted Stocks Could Ignite after EIA Inventory Data

Between January 10 and January 17, 2018, the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) rose 2% and 2.9%, respectively. Natural gas futures rose 11.2% over this period. However, upside in oil prices could be more important to these indexes.

Natural-gas-weighted stocks

The natural gas-weighted stocks that could rise with natural gas prices after the inventory report on January 18, 2018, based on the past four trading sessions’ correlations with natural gas prices are:

  • Antero Resources (AR) at 90%
  • Gulfport Energy (GPOR) at 76.2%
  • WPX Energy (WPX) at 47.2%

These natural-gas-weighted stocks are from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) with at least 60% production mixes in natural gas.

The natural-gas-weighted stocks that may not rise with natural gas prices after the inventory report on January 18, 2018, based on the past four trading sessions’ correlations with natural gas prices are:

  • Southwestern Energy (SWN) at 30.6%
  • EQT (EQT) at 11.5%

Part four will discuss the correlations of these natural-gas-weighted stocks with US crude oil.

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