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Gas-Weighted Stocks Are Inversely Related to Natural Gas

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Jun. 20 2019, Updated 7:37 a.m. ET

Natural gas–weighted stocks

In the trailing week, natural gas–weighted stocks might have moved inversely to natural gas prices. The natural gas–weighted stocks on our list that had the highest negative correlations with natural gas July futures on June 12–19 were:

  • Range Resources (RRC) at -70.8%
  • Antero Resources (AR) at -61.3%
  • Gulfport Energy (GPOR) at -53.8%

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 dominated natural gas–weighted stocks

The natural gas–weighted stocks that had the highest correlations with oil prices in the past five trading sessions were:

  • Antero Resources (AR) at 50.6%
  • Chesapeake Energy (CHK) at 47.1%
  • Southwestern Energy (SWN) at 37.3%

Antero Resources had the second-highest negative correlation with natural gas prices. Except Cabot Oil & Gas (COG), all of the natural gas–weighted stocks on our list had correlations of over 37% with US crude oil prices. Cabot Oil & Gas had a negative correlation of 53.6% with oil prices.

Oil’s significance

Oil prices can have a significant impact on the entire energy sector and not just on oil-weighted stocks. US crude oil prices are important in order to understand the US natural gas supply. Oil prices are often important for the energy sector’s general sentiment, which explains the divergence in the correlations among most of the natural gas–weighted stocks with oil and natural gas prices.

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