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Energy Select Sector SPDR Fund (NYSEARCA:XLE), which tracks the S&P 500 Energy sector, fell 3.3% in 2023, underperforming S&P 500 gain of 26.4%.
The sector, which houses behemoths like Exxon (XOM) and Chevron (CVX), faced macro pressures from Eurozone and China regions and low crude prices.
Crude oil closed 2023 more than 10% lower for its first annual decline in three years, as war and OPEC+ production cuts failed to boost prices enough to overcome rising supply growth outside of the cartel.
Front-month Nymex crude (CL1:COM) for February delivery ended the year -10.7% to $71.65/bbl, and front-month Brent Crude (CO1:COM) for March delivery settled -10.3% to $77.04/bbl, including declines in each of the final three months of the year.
Industries 2023 Performance
Energy Equipment & Services rose 3.4%, while Oil, Gas & Consumable Fuels fell 1.8% in 2023.
U.S. stock fund flows into and out of the energy sector have varied wildly from week to week. The energy-focused ETF had a net outflow of $2.32 billion in 2023.
What Are Top 5 movers in 2023
- Gainers: Phillips 66 (PSX) +28%.
- Marathon Petroleum (MPC) +28%.
- Targa Resources (TRGP) +18%.
- Diamondback Energy (FANG) +17%.
- Baker Hughes (BKR) +16%.
- Losers: APA Corp (APA) -23%.
- Devon Energy (DVN) -23%.
- Chevron (CVX) -17%.
- Marathon Oil (MRO) -11%.
- Exxon Mobil (XOM) -9%.
What Analysts Expect
Seeking Alpha analyst at large consider the energy sector (XLE) a Buy. Of the eight analysts, five of them have a Buy rating, two have a Hold rating and one has a Sell rating.
According to SA analyst Josh Arnold, energy stocks, including the Energy Select Sector SPDR Fund ETF, have been weak recently.
Citi Research rated the energy sector as market weight, as valuations remain attractive, and positive earnings are expected for 2024 as whole and relative performance could be bottoming, according to its U.S. Equity Strategy report on the sectors and industry groups.
SA analyst Michael Del Monte said, “Short-term market for the Energy Select Sector SPDR Fund ETF is flat-to-bearish, with Brent futures remaining in backwardation.”
What Quantitative Measures Say
XLE secured a Buy rating from Seeking Alpha’s Quant Rating system with a score of 3.51. The ETF scored an A+ for liquidity, and an A for Expenses, but only managed a D- for risk.
