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Energy Select Sector SPDR Fund (NYSERCA:XLE), which tracks the energy sector of the S&P 500, fell 3.3% in 2023, underperformance gain than S&P 500 26.4%.
The sector, which is home to giants such as Exxon (XOM) and Chevron (CVX), faced macroeconomic pressures from the eurozone and China regions and low crude oil prices.
Crude oil ended 2023 down more than 10%, its first annual drop in three years, as war and OPEC+ production cuts failed to boost prices enough to outpace surging oil growth. offer outside the poster.
First-month Nymex crude oil (CL1:COM) for February delivery ended the year down -10.7% at $71.65/bbl, and first-month Brent crude oil (CO1:COM) for March delivery closed with -10.3% to $77.04/bbl, including drops in each of the last three months of the year.
Industry performance in 2023
Energy equipment and services rose 3.4%while oil, gas and consumable fuels fell 1.8% in 2023.
The flows of US stock funds into and out of the energy sector have varied wildly from week to week. The energy-focused ETF had a net outflow of $2.32 billion in 2023.
What are the top five drivers in 2023?
- Winners: Phillips 66 (PSX) +28%.
- Petroleum Marathon (MPC) +28%.
- Targa Resources (TRGP) +18%.
- Diamondback Energy (FANG) +17%.
- Baker Hughes (BKR) +16%.
- Losers: APA Corporation (APA) -23%.
- Devon Power (DVN) -23%.
- Chevron (CVX) -17%.
- Marathon Oil (MRO) -eleven%.
- Exxon Mobil (XOM) -9%.
What analysts expect
Analysts looking for Alpha generally consider Energy (XLE) a buy. Of the eight analysts, five of them have a Buy rating, two have a Hold rating, and one has a Sell rating.
According to SA analyst Josh Arnold, energy stocks, including the Energy Select Sector SPDR Fund ETF, have been weak recently.
Citi Research rated the energy sector as a market weight, as valuations remain attractive and positive earnings are expected for 2024 as a whole and relative performance could be bottoming out, according to its US Equity Strategy report on sectors and industry groups.
SA analyst Michael Del Monte said: “The near-term market for the Energy Select Sector SPDR Fund ETF is flat to bearish, with Brent futures remaining in reverse.”
What quantitative measures say
XLE earned a Buy rating from Seeking Alpha's Quant Rating system with a score of 3.51. The ETF earned an A+ in liquidity and an A in Expenses, but only managed a D- in risk.
