Is Oil Offsetting Natural Gas’s Impact on Gas-Weighted Stocks?



Natural gas–weighted stocks’ returns

On November 7–14, our list of natural gas–weighted stocks fell 3.7% despite a rise of 36.1% in natural gas December futures. On average, natural gas–weighted stocks underperformed natural gas futures during this period.

Cabot Oil & Gas (COG) was the only natural gas–weighted stock that ended in the green during this period. Cabot Oil & Gas rose 1.5% during the same period.

The natural gas–weighted stocks that fell the most in the past five trading sessions were:

  • Southwestern Energy (SWN) fell 1.4%.
  • Gulfport Energy (GPOR) fell 5.6%.
  • Antero Resources (AR) fell 15.4%.
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Antero Resources and Southwestern Energy had the most negative correlations with natural gas futures on our list, which we discussed in Part 3. US crude oil prices fell 8.8% in the past five trading sessions. Although these natural gas–weighted had negative correlations with oil prices, the bearish sentiments in the oil market might have dragged these natural gas–weighted stocks despite the upside in natural gas.

These 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.

Since March 2016

Between March 3, 2016, and November 14, 2018, natural gas active futures rose 195.1% from a 17-year low. Our list of natural gas–weighted stocks fell 27.3% during the same period.

Cabot Oil & Gas has risen 18.8% since March 3, 2016—the only gainer on our list of natural gas–weighted stocks during this period. Let’s take a look at the natural gas–weighted stocks that fell the most during this period:

  • Antero Resources fell 40.6%.
  • Range Resources (RRC) fell 42.7%.
  • Gulfport Energy fell 63.4%.

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