Natural gas prices

On January 10, natural gas (UNG)(BOIL) February futures closed at $2.906 per MMBtu—0.6% below the previous closing price.

Which Natural Gas–Weighted Stocks to Watch after Inventory Data

A fall of more than 161 Bcf (Billion cubic feet) in natural gas inventories for the week ended January 5 may support natural gas prices. This fall could push natural gas inventories further below their five-year average on a week-over-week basis. The market expects a decline of 318 Bcf in natural gas inventories. The EIA (US Energy Information Administration) is slated to release natural gas inventory data today, on January 11.

In the trailing week, the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA) gained 1.3% and 1.8%. Natural gas prices were 3.4% down compared to a 3.1% rise in US crude oil futures over this period. Compared to natural gas prices, a rise in oil prices is more likely to support the energy constituents of these equity indexes.

Natural gas–weighted stocks

The natural gas–weighted stocks that could follow natural gas futures after the EIA inventory report, based on the correlations of the last five trading sessions with natural gas prices, are as follows.

  • Chesapeake Energy (CHK) at 69.1%
  • Gulfport Energy (GPOR) at 63.7%
  • EQT (EQT) at 44.5%
  • Southwestern Energy (SWN) at 44.1%

These natural gas–weighted stocks are part of a list that was collected from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). These stocks operate with at least 60% production mixes in natural gas.

The natural gas–weighted stocks that could avoid the changes in natural gas prices after the inventory report, based on the correlations in the seven calendar days up to January 10 with natural gas prices, are:

  • Antero Resources (AR) at 20.2%
  • WPX Energy (WPX) at 18.2%

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