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Are Natural Gas–Weighted Stocks Moving Inversely to Oil Prices?

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Aug. 18 2020, Updated 10:20 a.m. ET

Natural gas–weighted stocks

Most of the natural gas–weighted stocks on our list had negative correlations with US crude oil prices in the seven calendar days to October 24.

The natural gas–weighted stocks under review that might be inversely related to US crude oil December futures’ movements based on their correlations with US crude oil December futures in the last five trading sessions are:

  • Chesapeake Energy (CHK) at -29.7%
  • Southwestern Energy (SWN) at -25.5%

Only Antero Resources (AR) had a positive correlation of 25% with US crude oil prices in the trailing week.

The natural gas–weighted stocks mentioned above 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.

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Oil’s role

US crude oil prices are important for understanding US natural gas supplies. Oil prices are often important for the energy sector’s general sentiment.

Next, we’ll analyze natural gas–weighted stocks’ returns and see how their correlations with crude oil, natural gas, and the broader market might have driven their returns.

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