2026 has been an amazing year for investments that track crude oil and refined fuel prices. For example, from my recommended stocks, upstream oil producer Diamondback Energy (FANG) is up 35% year-to-date. Even more striking, the recommended refinery stock Valero Energy (VLO) is up 169% this year.
With the focus on gains in petroleum-related stocks, there has been little focus on natural gas. Let’s talk about the potential for natural gas stocks.
The United States Natural Gas Fund, LP (UNG) is an exchange-traded commodity pool that tracks the daily percentage changes of natural gas prices delivered at the Henry Hub in Louisiana. Here is the one-year chart of natural gas as tracked by UNG.
The UNG price is not the price of natural gas. Gas itself currently trades for $2.98 per MMBtu. The one-year range is anywhere from $2.50 to $6.76/MMBtu.
Natural gas is an abundant, low-cost energy source. Its prices are quite volatile. In 2022, it traded for over $9.00/MMBtu. Since early 2023, it has mostly stayed in a $2.00 to $4.00 range. Gas at $3.00 is equivalent to crude oil at $18.00 per barrel.
Several catalysts should drive higher natural gas prices. For reference, the pure-play upstream natural gas producers are profitable at $3.00 per unit of gas. If prices move higher, gains flow straight to the bottom line.
Liquefied natural gas (LNG) is the form in which natural gas can be exported to the rest of the world. The U.S. has become the world’s largest LNG producer and exporter. Europe enters the winter season with gas in storage well below the average for this time of year. A colder-than-expected winter could leave Europeans without enough gas to stay warm. In that case, Europe will have to compete with Asian countries for available LNG shipments. This will be good for LNG and natural gas prices.
Here in the U.S., building out data centers to support artificial intelligence (AI) will require a massive increase in available electric power. Natural gas is the easiest and best solution for adding power to the grid or for behind-the-meter power. Upstream gas producers are cutting long-term gas contracts directly with power producers for new power plants.
I like two pure-play upstream gas producers currently operating in the Marcellus shale.
Antero Resources (AR) has a $12 billion market cap. Its forward one-year earnings guidance of $4.44 per share puts AR at 8.7 times projected 12-month earnings.
EQT Corporation (EQT), with a $34 billion market cap, is the lowest-cost natural gas producer. This allows EQT to stay profitable at very low natural gas prices and lets it leverage higher earnings if gas prices rise. EQT trades at a current forward P/E of 14 times.
I view both stocks as solid long-term investments, with opportunities to add shares on dips that follow changes in natural gas prices.
Tim Plaehn's Energy Picks Are Up 470% And 201%. Here's What He'd Buy Before November 3rd.
When oil went below zero in 2020, Wall Street called energy dead money. Tim Plaehn kept his refiner. It's now up 470% since he recommended it in 2018. His natural gas pick from 2023 is up 201%. Now he's giving away the stock he'd buy first before the midterms, freeClick here.
