Investors have heard this, perhaps too much, this year: Energy is the worst-performing sector in the S&P 500 and has that unfortunate status by a wide margin. The Energy Select Sector SPDR (NYSEArca: XLE), the largest exchange traded fund dedicated to energy equities, is down 15.7% year-to-date.
Investors considering ETFs such as XLE and rival ETFs such as the Fidelity MSCI Energy Index ETF (NYSEArca: FENY) and the Vanguard Energy ETF (NYSEArca: VDE) need to again monitor oil production data and credit issues at smaller energy producers.
Obviously, production is a key element in the decision-making process regarding energy investments. Currently, oil investors face conflicting reports regarding output. For example, Venezuela’s crude output is plunging to multi-year lows while Algeria is looking to boost production.
“Indeed, since the sector is more than 20 percent below the 52-week high hit last December, it has fallen into a condition some refer to as a ‘technical bear market,’” reports CNBC. “Much of the sector’s weakness has been driven by rising shale oil production, increasing crude inventory and investors’ doubts about production cut cooperation by OPEC members.”