February was unkind to energy ETFs, including the Energy Select Sector SPDR (NYSEArca: XLE), the largest equity-based energy exchange traded fund. XLE shed 10.8% last month.

Making that drop all the more concerning is that XLE is, historically, one of the two best sector SPDR ETFs in February. Same goes for March and April. XLE’s February performance was its worst monthly showing since December 2015.

Current OPEC compliance with production cut plans remains above their historical average, and it usually takes between two to three quarters for inventories to normalize after the cuts. The challenge for energy equities is that some oil market observers see more declines coming for crude. Oil traders are concerned over how fast U.S. shale oil producers will increase production to capture the rising prices.

“Domestic crude supplies rose by 3 million barrels for the week ended Feb. 23. Analysts surveyed by S&P Global Platts had forecast a climb of 2.1 million barrels. Rising supply, along with falling demand, is a primary driver behind weakness in oil prices,” reports MarketWatch.

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