The Energy Select Sector SPDR (NYSEArca: XLE), the largest exchange traded fund dedicated to energy equities, is down nearly 10% year-to-date, underscoring the point that the energy sector is the worst-performing group in the S&P 500 this year.

Some of the struggles of oil and the energy sector this year can be pinned on investors’ concerns regarding the ability of major oil-producing nations, including the Organization of Petroleum Exporting Countries (OPEC), to effectively reduce production. And once again, energy investors will be closely monitoring news out of the cartel of major oil-producing nations over the near-term.

“While we see little surprise potential in terms of the length of the production cut, OPEC might agree to expand the cut, which would be taken positively by investors. Otherwise, we fear the sector could lose further momentum in the short term – since our upgrade, the oil price failed to gain traction despite OPEC and some non-OPEC producers‘ production cuts. Energy equities have not been able to decouple from volatile oil-price movements. The market does not give credit to the fundamental improvements of the companies’ cash flows,” according to a Deutsche Bank note posted by Crystal Kim of Barron’s.

Rig counts have recently ticked higher and with credit and earnings issues improving for some U.S. shale drillers, those companies may seize the opportunity to exploit higher pricing in the near-term. Some traders are not convinced and caution about betting on an energy sector rebound.

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