Energy prices, especially natural gas prices, rallied massively. While a pullback on the natural gas market could have been spotted in the past two days, the commodity still trades 130% year-to-date higher. Higher energy prices pose a threat to economic growth and threaten companies with higher costs. However, for some companies, higher natural gas prices are beneficial.
Why have natural gas prices rallied?
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Open account Try demo Download mobile app Download mobile appA number of factors contributed but it generally comes down to supply-demand imbalances. Shortage of natural gas in Europe depleted inventories and increased imports of US natural gas. As a result, US inventories also shrinks as Gulf production has not been fully restored after recent hurricanes. On top of that, forecasts point to a cold winter season ahead which boosts demand expectations. All of these combined led to a spike in prices that threatens to raise costs for companies and boost inflation further.
Natural gas companies
One group of companies that cannot complain about higher natural gas prices are, of course, natural gas producers. Companies involved in the natural gas sector rallied amid a jump in energy commodity prices. To be more precise, companies involved in natural gas exploration and production experienced big price jumps. Companies that have gained the most are ones that operate mostly onshore production facilities and were not impacted as much by recent hurricanes. Natural gas stocks can be an alternative for investors who want to trade the current situation on the energy markets but do not want risks and costs involved in futures trading.
Antero Resources (AR.US)
Antero Resources is a natural gas company focusing on exploration and production. Company operates in the Appalachian Basin and has over 17.5 trillion cubic feet of proven natural gas reserves. Thanks to a recent spike in natural gas prices, company's stock reached a 3-year highs near $19.00. This week's pull back has been minor compared to a drop in natural gas prices and as long as stock trades above the lower limit of the Overbalance structure, uptrend remains the base case scenario.
Source: xStation5
Range Resources (RRC.US)
Range Resources is a natural gas and petroleum exploration and production company, operating in the Marcellus Shale in the Appalachian Basin. Company has proven reserves of over 17 trillion cubic feet of natural gas equivalent. Share price of Range Resources reached the upper limit of a very steep upward channel at the beginning of this week and seesaw amid a drop in natural gas prices later on. Bull case remains strong, especially with forecasts that point to a cold winter season.
Source: xStation5
EQT Corporation (EQT.US)
EQT Corporation is engaging in natural gas exploration, production and pipeline transport. Just like other companies mentioned here, it also operates in the Appalachian Basin. Moreover, it is the largest natural gas producer in the region with almost 20 trillion cubic feet of proved reserves. Share price of EQT benefitted from the jump in natural gas prices, just as stocks of other producers. Stock tested 3-month highs above $22.50 but was unable to break higher and pulled back with natural gas prices. 23.6% retracement near $18.50 is a potential support level to watch.
Source: xStation5
Southwestern Energy (SWN.US)
Southwestern Energy is a natural gas producer, operating in the Appalachian Basin. Proved reserves of 11.9 billion cubic feet of natural gas equivalent making it one of the smaller companies in terms of reserves on the list. Nevertheless, its stock has also enjoyed very strong gains recently. Share price tested $6.00 area and reached the highest level since November 2018. Exterior 127.2% retracement of this year's downward move can be the first potential resistance on the way higher ($6.35 area).
Source: xStation5
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