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Natural Gas Prices and Natural Gas–Weighted Stocks

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Natural gas

On June 6, natural gas July futures rose 0.2% and closed at $2.896 per MMBtu (million British thermal units). In the trailing week, natural gas July futures rose 0.4%. Bearish weather forecasts might have limited natural gas’s upside.

The EIA’s (U.S. Energy Information Administration) inventory data are scheduled to be released on June 7. The data could be important for natural gas prices.

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Natural gas–weighted stocks

So, if natural gas makes a big move after the inventory data, which stocks would be impacted the most? The natural gas–weighted stocks that could be the most sensitive to natural gas prices based on the correlations in the trailing week with natural gas July futures were:

  • Southwestern Energy (SWN) at 76.1%
  • Gulfport Energy (GPOR) at 45.2%
  • Cabot Oil & Gas (COG) at 43.1%
  • Range Resources (RRC) at 36.7%

On May 30–June 6, all of the natural gas–weighted stocks on our list had positive correlations with natural gas July futures. Most of these natural gas–weighted stocks ended in the green during this period.

In Part 5 of this series, we’ll discuss natural gas–weighted stocks’ returns. First, let’s analyze the correlations of these natural gas–weighted stocks with US crude oil prices. Oil prices can have a significant impact on the entire energy sector and not just on oil stocks.

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% in natural gas.

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