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Natural Gas Stocks LNG, CHK, SWN Gain as Russia Limits Supply


  • Natural gas stocks are surging today, as the price of natural gas soars 7%.
  • This comes as Russia cuts of natural gas supplies to Denmark.
  • Concerns about global supply/demand imbalances are factoring into equity markets today.
natural gas stocks - Natural Gas Stocks LNG, CHK, SWN Gain as Russia Limits Supply

Source: OlegRi / Shutterstock

Today, a range of natural gas stocks are once again in focus for investors. From Cheniere Energy (NYSEMKT:LNG) to Chesapeake Energy (NASDAQ:CHK) and Southwestern Energy (NYSE:SWN), these stocks are all seeing gains of between 2% and 7% at the time of writing.

These moves come on the heels of rising natural gas prices. Today, the price of natural gas has increased more than 7%, boosting the valuation of producers, who earn substantially more in higher rate environments.

Much of this increase has to do with news that Russia has cut off its natural gas supply to Denmark. Reports that the largest Danish energy company has been cut off, due to failure to provide payment in Russian rubles, has many on edge with how energy policy will proceed in Europe. Russia has thus far taken a hardline stance on how it wishes to be paid for the energy it produces. The stability of the ruble, and the ability of the government to finance its war, depend on it.

With this in mind, let’s take a look at what investors are watching today.

Where Will Natural Gas Stocks Go From Here?

Of course, this is just a one day move. However, with the overall direction natural gas prices have been heading, investors are clearly bullish on this sector overall. Indeed, there are few places in this market to hide. Commodities and other sectors that benefit from inflation are being viewed as the portfolio hedges investors want to hold.

If natural gas supplies continue to be disrupted to Europe, alternative non-Russian natural gas producers will see higher demand, and be able to charge higher prices. For investors and traders, this appears to be a perfect storm that could take natural gas stocks higher.

Of course, the resumption of demand out of China could worsen some of these global demand concerns. For now, it appears natural gas prices are likely to remain elevated. And until the global economy slows, it’s going to be tough sledding for companies powered by natural gas. For producers, it’s a different story.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Article printed from InvestorPlace Media, https://investorplace.com/2022/06/natural-gas-stocks-lng-chk-swn-gain-as-russia-limits-supply/.

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