Energy Subsectors: Analyzing the Downside



Energy subsector ETFs

In the week ending May 3, major energy subsector ETFs had the following performances:

  • The VanEck Vectors Oil Services ETF (OIH) fell 5.5%.
  • The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 5.3%.
  • The VanEck Vectors Oil Refiners ETF (CRAK) fell 1.7%.
  • The Alerian MLP ETF (AMLP) fell 0.6%.
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Energy subsector

Last week, US crude oil prices fell 2.1%, while natural gas active futures fell 0.5%. The downside movement in energy commodities, apart from the earnings sentiments, dragged most of these energy ETFs.

However, due to the ongoing conflict in Libya and US waivers ending for countries importing oil from Iran last week, the Brent-WTI spread might expand. US downstream stocks account for ~30.1% of CRAK. The US downstream stocks could be impacted positively by another rise in the Brent-WTI spread this week. Last week, the Brent-WTI spread expanded by 58 cents. Gasoline prices fell less compared to oil prices, which might have limited the downstream stocks’ fall.

Energy sector performance

Last week, the Energy Select Sector SPDR ETF (XLE) fell 3%. XLE had the largest decline among the sector-specific SPDR ETFs under review. A downside in energy commodities’ prices might have pulled down XLE’s returns. The S&P 500 Index (SPY) rose 0.2% last week.

Last week, the Financial Select Sector SPDR Fund (XLF) rose 1.3%—the largest rise among the sector-specific SPDR ETFs. Most of the sector-specific SPDR ETFs closed in the green last week.


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