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Natural Gas prices in September have not followed any significant trend over the past 18 years. There is a slight trend in September for the price of natural gas to go down, but nothing consistent enough to determine a major trend. This lack of trend is probably due to hurricane season typically affecting prices negatively or positively.

In order to make any concrete recommendations concerning natural gas prices in September, it is necessary to look at the relations between price changes in September with the prices of various companies in the natural gas industry.

How do these price changes correlate with changes in the September price of natural gas?Unknown Object

Moves With NG Prices

UNG

APA

CHK

EOG

OKE

SGY

When Oil Prices Increase

0 out of 0

4 out of 8

6 out of 8

5 out of 8

6 out of 8

4 out of 8

When Oil Prices Decrease

2 out of 4

3 out of 10

4 out of 10

4 out of 10

5 out of 10

4 out of 10

First off, it is important to note that UNG has only been in the industry for four years, so their data, however weak, is presented for educational purposes.

For the other five companies, we see that CHK and OKE move the most consistently with the price of natural gas in the month of September, moving 55% and 61% respectively. What kind of price swings can we see when natural gas prices shift over the next month?

Let’s take a look at what kind of gains we can expect when the price of oil increases:

When NG Prices Increase

Natural Gas

UNG

APA

CHK

EOG

OKE

SGY

Total Change

88.00%

0.00%

12.94%

82.24%

27.48%

28.52%

33.11%

Average Change

11.00%

0.00%

1.62%

10.28%

3.44%

3.57%

4.14%

We see that each of the five companies profiled here follow natural gas in their prices, with CHK showing the biggest gains through September, posting a whopping 10.28% average gain month over month!

Can we see similar, downward trends, when natural gas prices decrease in September?

When NG Prices Decrease

Natural Gas

UNG

APA

CHK

EOG

OKE

SGY

Total Change

-97.79%

2.58%

34.45%

22.70%

23.87%

-4.11%

57.23%

Average Change

-9.78%

1.29%

3.45%

2.27%

2.39%

-0.41%

5.72%

We actually do not see the similar trend. Five out of the six companies in this research actually show an increase in price due to the increasing natural gas prices. The only loss we see here is from OKE, which loses on average less than a half a percentage point during the month of September. So if we see that natural gas prices are priced in lower than August, do not shy away from buying in the natural gas industry because these companies still pay out.

Total Sept Change '93-'10

Natural Gas

UNG

APA

CHK

EOG

OKE

SGY

Total Change

-9.79%

2.58%

47.39%

104.94%

51.35%

24.41%

90.34%

Average Change

-0.54%

0.65%

2.63%

5.83%

2.85%

1.36%

5.02%

Overall, every company has seen positive trends in their prices over these periods, even with the average price of natural gas decreasing in September.

How do we use this information?

Given the tough market environment, it is nice to see that natural gas companies have had such significant positive months in September.

This hurricane season is supposed to be pretty strong with 9 hurricanes forecasted, and the first one occurring here in late August. A rough hurricane season will definitely positively affect natural gas prices, and with recent weakness, that move could be pretty volatile.

Overall, we have seen the best results from CHK and SGY. We are a fan of these stocks as a natural gas play on the bullish side for September.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Dollar And Sense: The Ways To Play Natural Gas For September