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Energy Commodities Impacted Gas–Weighted Stocks’ Returns

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Natural gas–weighted stocks’ returns

On May 22–29, our list of natural gas–weighted stocks fell 2.3%, while natural gas active futures rose 2.5%. On average, natural gas–weighted stocks underperformed natural gas futures during this period. 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.

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Outperformers

The following natural gas–weighted stocks were the outperformers in the trailing week:

  • Southwestern Energy (SWN) rose 1.3%.
  • Range Resources (RRC) rose 1.1%.
  • Antero Resources (AR) rose 1%.

During this period, Antero Resources and Southwestern Energy had the first and second-highest correlations with natural gas prices, which might explain their outperformance.

Underperformers

The following natural gas–weighted stocks were the underperformers in the trailing week:

  • Chesapeake Energy (CHK) fell 2.3%.
  • Cabot Oil & Gas (COG) fell 5%.
  • Gulfport Energy (GPOR) fell 9.8%.

These three stocks had a positive correlation with US crude oil prices. Cabot Oil & Gas had the highest positive correlation with oil prices among natural gas–weighted stocks. In the trailing week, US crude oil prices fell 4.2%. By the end of the year, Chesapeake Energy’s production mix in oil could rise to 26% from 19% in the fourth quarter of 2018.

Natural gas’s 17-year low

Between March 3, 2016, and May 29, 2019, natural gas active futures rose 60.6% from a 17-year low. Our list of natural gas–weighted stocks fell 50.2% during the same period.

Cabot Oil & Gas has risen 16.9% since March 3, 2016. Cabot Oil & Gas was the only gainer on our list of natural gas–weighted stocks during that period. Let’s take a look at the natural gas–weighted stocks that fell the most during this period:

  • Antero Resources fell 70.8%.
  • Range Resources fell 73.1%.
  • Gulfport Energy fell 76.7%.
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