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XOP Is Underperforming Other Energy ETFs

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Upstream space is underperforming

On November 12–19, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 1.6%—the largest decline among major energy ETFs. A fall of 4.8% in US crude oil prices has either dragged or limited the upside in upstream energy stocks. However, with OPEC and non-OPEC oil producers’ plan to reduce the oil output, US crude oil prices might see an upside.

Other major energy ETFs’ performances in the trailing week were:

  • The Energy Select Sector SPDR ETF (XLE) rose 0.1%.
  • The Alerian MLP ETF (AMLP) fell 0.9%.
  • The VanEck Vectors Oil Services ETF (OIH) fell 0.9%.
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Natural gas might support upstream energy stocks

Natural gas December futures rose 24.1% in the trailing week and settled at $4.7 per million British thermal units on November 19—the second-highest closing level since June 18, 2014. The rise in natural gas prices might support upstream energy stocks amid oil’s decline in the past five trading sessions.

According to Reuters, for the next two weeks, Refinitiv analysts have increased the total degree days from 384 on November 19 to 393 later on the same day in the Lower 48 US states. The increase might result in higher natural gas use for heating than previously expected, which could boost natural gas this week. The total degree days are also higher than the 30-year average of 336 for these weeks.

The above analysis could be important for upstream energy stocks like Occidental Petroleum (OXY), Apache (APA), Devon Energy (DVN), and EOG Resources (EOG).

Next, we’ll discuss the top gainers on our list of upstream stocks.

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