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After months of strength, oil prices are exhibiting short-term weaknesses, with China imposing additional COVID-19 lockdowns. Analysts are concerned that reduced crude demand could meet with an oversupplied market in the near term.
However, oil stocks are showing a completely different scenario. The Energy Select Sector SPDR Fund (XLE) aims to provide before-expenses investment results that correspond with the price and yield performance of the Energy Select Sector Index companies. The fund follows a replication strategy and offers exposure to the U.S. energy sector.
The ETF has gained 65.3% over the past year, 65.5% year-to-date, and 10.9% over the past three months, compared with the broader SPDR S&P 500 ETF Trust’s (SPY) 12.3%, 15.3%, and 0.7% declines over the same periods, respectively. The ETF closed the last trading session at $91.87. XLE has a five-year beta of 1.57.
Moreover, the EU embargo and the G7 price cap could tighten the oil market just the time when winter hits the northern hemisphere. This could keep investors bullish on crude oil.
Here are the factors that could affect XLE’s performance in the near term:
Fund Stats
As of November 25, XLE has…
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