Big Things Could be Afoot for Energy Stocks, ETFs

Oil prices have doubled off their recent lows helping make energy the second-best performing sector in the S&P 500 this year while boosting exchange traded funds such as the Energy Select Sector SPDR (NYSEArca: XLE).

After two years of dismal performances, the energy sector, the seventh-largest sector weight in the S&P 500, is on the mend. Making the sector’s rebound this year all the more impressive is that it comes against the backdrop of still low oil prices, little help in the way of significant production cuts and massive spending reductions by global oil majors.

Related: Bears Look to Feast on These 8 Energy ETFs

Some market observers see the upside continuing for XLE.

“I don’t think the run is over,” Rich Ross said Wednesday on CNBC’s “Trading Nation.”

Rivals to XLE include the Vanguard Energy ETF (NYSEArca: VDE), iShares U.S. Energy ETF (NYSEArca: IYE) and the Fidelity MSCI Energy Index ETF (NYSEArca: FENY).


Investors should be aware that XLE and its aforementioned rivals allocated hefty portions of their lineups to the largest oil companies, including Dow components Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) along with Schlumberger (NYSE: SLB), the largest oilfield services provider. In some cases Exxon Mobil and Chevron, the two largest U.S. oil companies, combine for up to a third of these ETFs’ weights.