On August 8, natural gas September futures rose 1.8% and settled at $2.949 per MMBtu (million British thermal units)—the highest closing level for active natural gas futures since June 27. Rising temperatures in the United States might be behind the rise in natural gas prices.
The EIA’s (U.S. Energy Information Administration) natural gas inventory report is scheduled to be released on August 9. The report could be important for natural gas prices.
Are natural gas–weighted stocks moving inversely to natural gas prices?
All of the natural gas–weighted stocks had negative correlations with natural gas futures on August 1–8.
The natural gas–weighted stocks that might have moved the most inversely to natural gas prices based on their correlations with natural gas prices in past trading sessions are:
- Antero Resources (AR) at -55.7%
- Gulfport Energy (GPOR) at -72.5%
- Range Resources (RRC) at -75.4%
- Chesapeake Energy (CHK) at -95.7%
None of the natural gas–weighted stocks on our list had negative correlations of less than 41% with natural gas prices on August 1–8.
Later in 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, 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.