“Eventually, we expect pain for oil prices as growing U.S. production serves as the primary weight to tip oil markets back into oversupply,” said Morningstar. “Our midcycle forecast for WTI is still $55/bbl. We think oil bulls are failing to recognize the potential for further productivity gains from U.S. producers and are unduly worried about prime shale acreage running out more quickly than it really will.”
XLE and other traditional cap-weighted energy ETFs are typically heavily allocated to Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX). Those stocks combine for over 37% of XLE’s roster.
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).
For more information on the oil market, visit our energy category.