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Energy Subsector: What Might Impact This Week

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Energy subsector ETFs

In the week ending April 18, major energy subsector ETFs had the following performances:

  • The VanEck Vectors Oil Services ETF (OIH) rose 0.3%.
  • The VanEck Vectors Oil Refiners ETF (CRAK) fell 0.3%.
  • The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 2%.
  • The Alerian MLP ETF (AMLP) fell 2%.
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Energy subsector

Last week, US crude oil prices rose 0.1%, while natural gas active futures fell 6.3%. On April 18, natural gas active futures settled at $2.49 per MMBtu (million British thermal units)—the lowest closing level for active natural gas futures since June 8, 2016. The movement might have either limited the upside or dragged most of these energy ETFs.

However, with US crude oil active futures moving towards their six-month high during trading on April 22, things might change for energy ETFs this week. Due to the ongoing conflict in Libya and US waivers possibly ending for countries importing oil from Iran this week, the Brent-WTI spread might expand. US downstream stocks account for ~30.1% of CRAK and could be impacted positively by another rise in the Brent-WTI spread this week. Last week, the Brent-WTI spread expanded by 31 cents.

Energy sector performance

Last week, US crude oil June futures rose 0.1%, while the Energy Select Sector SPDR ETF (XLE) fell 0.5%. XLE had the second-lowest decline among the sector-specific SPDR ETFs under review. A large downside in natural gas prices might have pulled down XLE’s returns. The S&P 500 Index (SPY) fell 0.1% last week.

Last week, the Industrial Select Sector SPDR Fund (XLI) rose 1.3%—the largest rise among the sector-specific SPDR ETFs. The Health Care Select Sector SPDR Fund (XLV) fell 4.3%—the largest decline among the sector-specific SPDR ETFs.

Most of the sector-specific SPDR ETFs managed to close in the green last week.

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