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Oil’s Fall Made Natural Gas–Weighted Stocks’ Fall Sharper

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Jun. 6 2019, Updated 10:33 a.m. ET

Natural gas–weighted stocks’ returns

On May 29–June 5, our list of natural gas–weighted stocks fell 6.1%, while natural gas active futures fell 9.4%. On average, natural gas–weighted stocks outperformed 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:

  • Cabot Oil and Gas (COG) was unchanged.
  • Range Resources (RRC) fell 5.1%.
  • Antero Resources (AR) fell 5.3%.

Cabot Oil & Gas’s premium price realization for natural gas might have limited the stock’s downturn. Range Resources and Antero Resources had higher correlations with US crude oil than natural gas prices. US crude oil prices fell 12.1% in the trailing week.

Underperformers

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

  • Gulfport Energy(GPOR) fell 5.8%.
  • Southwestern Energy (SWN) fell 8.1%.
  • Chesapeake Energy (CHK) fell 12.1%.

Chesapeake Energy had the highest correlations with US crude oil prices. 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. The remaining two stocks had higher correlations with oil than natural gas prices. The fall in oil prices made these natural gas–weighted stocks fall sharper.

Natural gas’s 17-year low

Between March 3, 2016, and June 5, 2019, natural gas active futures rose 45.1% from a 17-year low. Our list of natural gas–weighted stocks fell 52.7% during the same period.

Cabot Oil & Gas has risen 17% 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 72.4%.
  • Range Resources fell 74.5%.
  • Gulfport Energy fell 78%.
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