Natural gas is the second-largest asset class in the S&P 500, but the stock market hasn’t been able to keep up with rising gas prices.
Natural gas stocks have dropped 20% since the start of the year, as the market has been trying to recover from the oil shock of the past two years.
That’s driven down the value of companies like Peabody Energy, Chesapeake Energy, and Apache Corporation, which are all in the energy sector, according to Morningstar.
Gas prices have been falling fast, too.
Last week, natural gas stocks fell by 17% in the past 24 hours, as investors watched prices rise by $3.26 per thousand cubic feet (cfm) from $3 per thousand barrels.
Natural Gas stocks are now down about 17% since last year.
If the stockmarket had stayed at $4 per cfm in April, then they would be down by roughly 28%.
Natural gas stock prices are up nearly 2% this year, according the S.&?amp;M.
Gas Industry Association.
That could be a good sign if prices keep falling.
But the stock markets have been trading in the red for a long time, as a result of weak commodity prices, and a lack of growth in demand.
Companies that have seen their earnings increase as prices fell include ConocoPhillips, Royal Dutch Shell, Chevron, and Exxon Mobil.
The S&s energy sector is also the main driver of the stockmarkets overall performance, with oil and natural gas being the two largest components.
But if prices don’t rebound, that could change the way that these companies operate.
Companies like Chesapeake and Peabox Energy are trying to grow, and it could make their investments more risky, says Matt Zuckerman, senior analyst at Zillow.
Companies with large reserves like Peacock Energy and Conoco Phillips could be hit harder, and companies like Apache and Chesapeake could see their stock prices drop.
That would be a bad thing for the energy industry.
“The market has always been a good place to invest for long-term growth,” says Zuckman.
“But there are more companies than ever before.”