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Did Oil Boost Energy ETFs?

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Updated

Energy subsector ETFs

In the week ending May 17, major energy subsector ETFs had the following performances:

  • The VanEck Vectors Oil Refiners ETF (CRAK) rose 1.1%.
  • The Alerian MLP ETF (AMLP) rose 0.9%.
  • The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 1%.
  • The VanEck Vectors Oil Services ETF (OIH) fell 2.6%.

Last week, US crude oil prices rose 1.8%, while natural gas active futures rose 0.5%. The Brent-WTI expanded by $0.5 last week, which might have supported downstream stocks. Rising tension between Saudi Arabia and Iran is likely behind the expansion in the spread. The spread might remain higher this week.

Despite the upward movement in oil, the earnings sentiment dragged down most of these energy ETFs. The S&P 500 Index (SPY) fell 0.8%—an important factor for these ETFs’ price performance. Apart from earnings sentiments, the oil rig count, which is at a new one-year low, is a concern for the oilfield services subsector.

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Energy sector performance

Last week, 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 downside in the equity market might have pulled down XLE’s returns.

The Real Estate Select Sector SPDR (XLRE) rose 1.5% and outperformed SPDR ETFs. Last week, the Financial Select Sector SPDR ETF (XLF) fell 2.2%—the largest fall among the sector-specific SPDR ETFs. Most of the sector-specific SPDR ETFs closed in the red last week.

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