On June 19, natural gas July futures closed at a premium of ~$0.24 to July 2019 futures. The difference is called the “futures spread.” On June 12, the futures spread was at a premium of ~$0.27. On June 12–19, natural gas July futures fell 1.3%.
Futures spread and natural gas market
The market’s sentiments around natural gas’s demand-supply situation are reflected in the futures spread. In the past five trading sessions, the premium contracted along with a more than 1% fall in natural gas prices. A contraction in the premium could reflect concerns about natural gas supplies outpacing demand. We discussed the possible upside in natural gas production in Part 2 of this series.
Energy stocks and ETFs
Any fall in natural gas prices could have a negative impact on natural gas–weighted stocks like Chesapeake Energy (CHK), Antero Resources (AR), and Cabot Oil & Gas (COG). On June 12–19, these three stocks returned -0.4%, 1%, and 1.5%, respectively—the underperformers on our list of natural gas–weighted stocks. Natural gas July futures fell 1.3% during this period. Most of the natural gas–weighted stocks on our list rose despite the fall in natural gas prices.