How Natural Gas–Weighted Stocks Are Related to Oil’s Moves



Natural gas–weighted stocks

The natural gas–weighted stocks that could follow oil’s rise based on the past five trading sessions’ correlations with US crude oil May futures were:

  • Southwestern Energy (SWN): 79.4%
  • Cabot Oil & Gas (COG): 77.1%
  • Range Resources (RRC): 64.1%
  • Gulfport Energy (GPOR): 56.4%
  • Chesapeake Energy (CHK): 46.9%

In the trailing week, US crude oil May futures rose 5.4%. Between April 4 and April 11, 2018, Antero Resources (AR) had a correlation of 46.9% with US crude oil futures—the lowest correlation on our list. AR also had the lowest negative correlation with natural gas futures over this period. We discussed this topic in the previous part.

These natural gas–weighted stocks are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). They operate with a production mix of at least 60.0% in natural gas based on their latest quarterly production data.

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Oil’s role

Oil prices are important in order to understand natural gas supplies. Oil prices are important for general sentiment regarding the energy sector. So, any changes in oil prices would be vital for these natural gas–weighted stocks. All of these natural gas–weighted stocks had positive correlations with US crude oil compared to the negative correlations with natural gas prices in the trailing week.


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