A Major Upside for the Natural Gas Stocks

After an enormous, pandemic-induced crash in 2020, the stock market in the United States has returned to winning ways and is having yet another banner year this year. The S&P 500 is up 16.0 percent so far this year and continues to set new all-time highs. Few market segments, however, have fared better than the long-suffering energy sector.

After years of underperformance, the energy sector has been a star performer this year, with the Energy Select Sector SPDR ETF up 30.0 percent year to date, second only to the retail sector’s SPDR S&P Retail ETF’s 49.8 percent year to date gain. The Delta Covid-19 version has cast a pall over the entire market. On the other hand, analysts argue that the latest wave of infections has yet to convert into a drop in consumer spending, with significant consumer spending indices including air traffic, dining out, and movie box office remaining in the black.

The energy sector is coming back after a period of increased volatility due to an OPEC+ disagreement over output levels, with Wall Street mainly staying bullish on the mid-term outlook. After last year’s slump, which put oil prices into negative territory, the oil sector has recently taken center stage. On the other hand, the Natural Gas sector has performed even better, with the most well-known Natural Gas benchmark, the United States Natural Gas ETF, LP, up 48.6 percent YTD as a result of the current Natural Gas rally.

On Thursday, futures were trading at $3.95/MMBtu, putting them on course for their fourth month of solid rises. Natural Gas prices had risen 63.4 percent this year and 135.7 percent from a year ago, with prices returning to levels last seen in December 2018, when gas was above $4.