17 Jan

Natural Gas–Weighted Stocks Might Be Sensitive to Natural Gas

WRITTEN BY Rabindra Samanta

Natural gas

On January 16, natural gas February futures fell 0.9% and settled at $3.38 per MMBtu (million British thermal units). Concerns about the weather have dragged active natural gas futures from the highest closing level since August 23.

Natural Gas–Weighted Stocks Might Be Sensitive to Natural Gas

On January 17, the U.S. Energy Information Administration is scheduled to report the natural gas inventory for the week ending January 11. The inventory data might dismay natural gas bulls.

Which natural gas–weighted stocks follow natural gas prices?

The natural gas–weighted stocks that might be sensitive to natural gas prices based on their correlations in the last five trading sessions are:

  • Range Resources (RRC) at 94.1%
  • Cabot Oil & Gas (COG) at 67.1%
  • Antero Resources (AR) at 45.2%
  • Southwestern Energy (SWN) at 43.2%

Chesapeake Energy (CHK) and Gulfport Energy (GPOR) had negative correlations of 22.6% and 57.2% with natural gas prices in the seven calendar days to January 16.

Later in this series, we’ll discuss natural gas–weighted stocks’ returns. First, we’ll 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.

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