Energy stocks and the corresponding ETFs got a big boost Wednesday after the Organization of Petroleum Exporting Countries (OPEC) finally agreed to reduce crude output.
The cartel pledged to pare oil output by 32.5 million barrels per day.
The news sent ETFs such as the Energy Select Sector SPDR (NYSEArca: XLE), the largest equity-based energy ETF, soaring. XLE is already this year’s best-performing member of the sector SPDR suite.
Revitalized earnings could push the sector higher. The growth is not surprising as the energy sector has been one of the worst areas in earnings growth. For Q3 2016, the sector is expected to reveal its largest year-over-year earnings decline of 66%, the worst performance of all 11 S&P 500 sectors.
Some technical analysts are concerned about the state of equity-based energy ETFs after the group has pushed higher for much of this year.