Making the situation all the more vexing is that natural gas is the best performing commodity in the S&P GSCI Commodity Index this year. That is relevant because Exxon Mobil and Chevron, 30% of XLE’s weight, among others, have previously been criticized for being too “gassy” in their output levels. In fact, Exxon Mobil is the largest natural gas producer in the U.S., but slid almost 9% in a month where two of the best ETFs of any type were natural gas funds. [January’s 10 Best ETFs]
There is some hope for beleaguered energy sector bulls. Not only does late February mark the start of the energy sector’s seasonal sweet spot, but the group is now inexpensive. The S&P 500 Energy Sector’s estimated bottom up P/E ratio according to Silverblatt is 12.32, the lowest of the 10 sectors. Not only is energy significantly discounted relative to the S&P 500 (14.75 P/E), but the sector is also cheaper than utilities (15.06) and consumer staples (16.18).
Energy Select Sector SPDR
