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The oil and gas sector is the stock market’s worst performer this year, down 10% compared to the broader S&P 500’s 7.5% gain, after leading the market by a large margin last year with a record 59%.
While different factors Including the Russian invasion of Ukraine, which led to a rise in commodity prices last year, and raised the stocks of energy companies, and concerns about the global economic slowdown and energy demand, which led to a decline in oil and gas prices this year, which led to a decline in energy stocks with it.
Investors avoid Mutual funds and ETFs that track energy stocks, withdrawing more than $7 billion from energy stock funds so far in 2023 on a net basis, according to Refinitiv Lipper fund flows data as of Wednesday.
But oil prices and energy stocks can stabilize if fears of a global slowdown subside. Supply remains tight, and US oil and gas companies prioritize shareholder profits over capacity expansion.
Energy companies also look relatively cheap from a valuation standpoint, with companies in the S&P 500 energy sector trading at about 10x expected earnings over the next 12 months, compared to a broad S&P multiplier of roughly 18x.
The US benchmark and Brent crude fell for the fourth week in a row, with Nymex front-month delivery (CL1:COM) for June delivery. -1.8% To $70.04 a barrel this week, Brent crude closes for June (CO1:COM) -1.5% per week at $74.17 per barrel.
So far this year, US WTI -12.7%and Brent crude -13.7%; During the four-week losing streak, WTI is down 15% and Brent is down 14%.
ETFs: (NYSEARCA: USE), (BNO), (UCO), (SCO), (DBO), (USL), (DRIP), (GUSH), (USOI), (NRGU)
energy (New York: XLE) was the biggest loser this week among the S&P sectors, -2.1%.
Top 10 gainers in energy and natural resources over the past 5 days: (ADSE) +45.2%(IMPP) +42.5%(via) +27%(FLNC) +25.5%(CETY) +24.6%(EOSE) +20.2%(HNRG) +19.7%(nep) +17.8%(AZRE) +16.3%(KLXE) +15.1%.
Top 10 losers in energy and natural resources over the past five days: (DFLI) -39.9%(He is) -25.2%(ATLX) -19.9%(stopper) -19.5%(EXK) -19.2%(sbso) -18.4%(BPT) -16.6%(repex) -16.6%(nine) -15.6%(ERO) -14.6%.
Source: Barchart.com