On Monday, Goldman Sachs also issued a bullish view on the energy sector, noting that the sector actually performs well when it enters “restraint” phases. Goldman has Buy ratings on Chevron and ConocoPhillips.
Over the past 10 years, no sector is as correlated to inflation as is energy and the competition is not even close, according to S&P Dow Jones data.
Declining prices in recent years have prompted scores of major oil producers to rein in capital spending. Technological improvements and greater efficiency has helped U.S. shale producers pump out crude oil at lower margins – some say it is now profitable at less than $50 per barrel. Additionally, companies are finding easy access to credit and private-equity firms have bought out struggling companies, which have kept production flowing.
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). FENY is the least expensive energy ETF on the market with an annual fee of just 0.084%, or $8.40 on a $10,000 investment.
For more information on the oil market, visit our oil category.