Natural-gas-weighted stocks

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

  • Chesapeake Energy (CHK) at 52%
  • Range Resources (RRC) at 27%

Is Oil Losing Its Grip on Natural-Gas-Weighted Stocks?

However, despite the highest correlation, CHK fell 3.3% compared to a 3.3% rise in US crude oil in the seven calendar days to December 4. In the last trading session, CHK declined 6.5% despite oil’s 0.6% rise. The 3.2% fall in the S&P 500 Index (SPY) on the same day might be behind this fall.

The rest of the natural-gas-weighted stocks on our list had negative correlations with US crude oil prices. Southwestern Energy (SWN) and Cabot Oil & Gas (COG) had the highest negative correlations of  69.7% and 97.9% with oil prices. In fact, Southwestern Energy fell 6.8%, the most on our list of natural-gas-weighted stocks.

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.

Oil’s role

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

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