Energy stocks and the Energy Select Sector SPDR (NYSEArca: XLE), the largest equity-based energy ETF, followed the broader market lower last Friday, but last week was still solid for the downtrodden energy sector. For example, XLE gained more than 2% on the week as some traders believe the sector offers more upside.
Market observers and analysts argue that U.S. energy stocks are in a position to outperform broader equity markets this year, even if oil prices don’t move higher. The energy industry has grown more efficient after cutting costs in response to the plunge in crude oil prices in previous years, so they are now in a better position to improve revenue at lower oil prices.
“Crude oil recaptured a level above $60 in late December for the first time since 2015. Oil began to claw its way back from lows through 2016 as global oil producers, including the Organization of Petroleum Exporting Countries, made efforts to address a supply-demand imbalance,” reports CNBC.