Natural gas stocks experienced a notable decline on Monday, following the National Weather Service's announcement of a milder-than-average weather forecast for December across the Midwest.
The predicted weather conditions are associated with an upper-level jet stream pattern, which is expected to inhibit the movement of extremely cold air masses into the region. This pattern is often seen during strong El Nino episodes, such as the current one.
The Climate Prediction Center has identified a 70 to 80% likelihood that the average temperature for December will surpass the norm in the local area. This warmer forecast has had a direct impact on natural gas prices, consequently affecting stocks related to the commodity.
The First Trust Natural Gas ETF saw a decrease of 2.3% in its value. This downturn was led by significant losses in individual natural gas stocks, including Comstock Resources (NYSE:CRK), which fell by 4.7%, Kosmos Energy (NYSE:KOS) with a 4.3% drop, SM Energy (NYSE:SM) declining by 3.9%, and CNX Resources (NYSE:CNX) decreasing by 3.4%.
Moreover, some of the poorest-performing stocks within the S&P 500 Index were those with exposure to natural gas prices.
Targa Resources (NYSE:TRGP) saw a 4.7% reduction, Williams Companies (NYSE:WMB) declined by 3.2%, and Oneok experienced a 2.9% fall on Monday. These movements in the stock market reflect the immediate impact of the anticipated change in weather on the natural gas industry.
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