On July 25, natural gas September futures rose 1.3% and settled at ~$2.76 per MMBtu (million British thermal units). Moreover, on the same day, natural gas futures were 2.2% above their lowest closing level in more than three months. The forecast of hotter summer weather could be behind natural gas’s rise.
The EIA’s (U.S. Energy Information Administration) natural gas inventory report is scheduled to be released on July 26, and it could be important for natural gas prices.
Natural gas–weighted stocks
The natural gas–weighted stocks that might be sensitive to natural gas’s movements based on their past trading sessions’ correlations with natural gas prices are as follows:
- Antero Resources (AR) at 93.8%
- Gulfport Energy (GPOR) at 88%
- Range Resources (RRC) at 79.1%
- Cabot Oil & Gas (COG) at 67.6%
None of the natural gas–weighted stocks on our list had correlations of less than 27% with natural gas prices between July 18 and July 25. Natural gas’s recent recovery could boost these natural gas-weighted stocks.
Later in this series, we’ll look at 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—not just on oil stocks.
The above-mentioned natural gas–weighted stocks are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). They operate with production mixes of at least 60.0% in natural gas.