Energy Sector Outperforming the S&P 500 This Week



Natural gas and crude oil leading the rise

For the week ended September 15, 2017, natural gas (UNG) prices are leading the rise in energy commodities. Natural gas prices increased from their last week’s close of $2.89 per MMBtu (million British thermal units) on September 8 to $3.07 per MMBtu on September 14– an increase of almost 6% so far.

Natural gas prices rose every day of this week. Another energy commodity that is following natural gas on the upside is crude oil (USO). On September 14, 2017, crude oil prices increased strongly by more than 5% from their last week’s close of $47.48 per barrel to $49.89 per barrel. Heating oil increased less than 1% this week, while gasoline was down.

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Gasoline in decline

For the week starting September 11, 2017, unleaded gasoline (UGA) prices led the decline in energy commodities. Unleaded gasoline prices declined strongly from their previous week’s close of $1.65 per gallon on September 8 to $1.60 per gallon on September 14, a decrease of more than 3%.

Gasoline prices are trading marginally above their 200-day and 50-day moving averages. On September 14, 2017, gasoline’s 200-day and 50-day moving averages stood at $1.60 and $1.59, respectively. Gasoline and heating oil prices impact refining companies (CRAK).

Energy equities

With the impressive performance from crude oil and natural gas, the energy sector is also rising strongly this week. On September 14, the Energy Select Sector SPDR ETF (XLE), which represents an index of stocks across the energy sector, rose ~1%.

Stocks that are leading the rise in XLE are Range Resources (RRC), Chesapeake Energy (CHK), Newfield Exploration (NFX), Helmerich & Payne (HP), and Concho Resources (CXO). These stocks rose ~13.3%, ~12.6%, ~9.7%, ~9.5%, and ~8.7%, respectively, this week.

Range Resources (RRC) and Chesapeake Energy (CHK) are mostly natural gas producers and could have risen due to the strong gain in natural gas prices this week. The only stock trading in negative territory from XLE this week is Marathon Petroleum (MPC), which fell ~2.0%.

In general, for the week starting September 11, XLE is outperforming the SPDR S&P 500 ETF (SPY). On September 14, SPY had risen ~1.4% for the week.

In this series…

Having analyzed the performance of broader energy sector in the current week, we will also look at the performance of various energy subsectors. Specifically, we’ll look at the gainers and losers from the upstream segment, oilfield services, refining and marketing, and integrated energy subsectors. We will also analyze any news or developments behind these moves.

Let’s start with this week’s upstream gainers.


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