Are Natural Gas-Weighted Stocks Reacting to Higher Oil Prices?


Jul. 5 2018, Updated 11:55 a.m. ET

Returns of natural gas–weighted stocks

Between June 26 and July 3, our list of natural gas–weighted stocks rose 1.1%, while natural gas August futures fell 2.1%. On average, natural gas–weighted stocks outperformed natural gas futures in the trailing week.

Below are the natural gas–weighted stocks that saw the largest increases in the trailing week:

  • Chesapeake Energy (CHK) rose 5%.
  • Gulfport Energy (GPOR) rose 2.3%.
  • Antero Resources (AR) rose 1.9%.

GPOR had a higher and negative correlation with both US crude oil and natural gas futures in the past five trading sessions, as we discussed in the previous two articles. CHK and AR both had higher and positive correlations with US crude oil and natural gas prices. However, these two stocks’ returns have been more in line with the 5.1% rise in US crude prices in the past five trading sessions.

The remaining natural gas-weighted stocks ended in the red but outperformed natural gas prices in the seven days leading up to July 3.

All of 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% natural gas.

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Since March 2016

Between March 3, 2016, and July 3, natural gas active futures rose 75.1% from their 17-year low. Our list of natural gas–weighted stocks fell 17% during that period.

Chesapeake Energy and Cabot Oil & Gas (COG) have risen 23.7% and 7%, respectively, since March 3, 2016. They have been the only gainers among our natural gas–weighted stocks during the period. Below are the natural gas–weighted stocks that fell the most during the period:

  • Southwestern Energy (SWN) fell 27.5%.
  • Range Resources fell 44.7%.
  • Gulfport Energy fell 49.7%.

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