Natural-gas-weighted stocks

The natural-gas-weighted stocks on our list that had the highest correlations with natural gas active futures in Q2 2019 so far are:

  • Chesapeake Energy (CHK) at 28.4%
  • Southwestern Energy (SWN) at 24.4%

Has Oil Influenced Natural-Gas-Weighted Stocks More in Q2?

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.

However, all the natural-gas-weighted stocks on our list had higher correlations with US crude oil prices:

  • Chesapeake Energy (CHK) at 55.7%
  • Gulfport Energy (GPOR) at 39.7%
  • Cabot Oil & Gas (COG) at 34%

In fact, Cabot Oil and Gas had the only negative correlation with natural gas futures. But, COG operates with a production mix of 100% in natural gas. Chesapeake Energy’s shift in the production mix could explain its relationship with oil prices.

Oil’s significance

Oil prices can have a significant impact on the entire energy sector, 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 different trend in correlations among natural-gas-weighted stocks with oil and natural gas prices.

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