Energy ETFs Outperforming on Higher Oil Prices

ETF Trends

Energy sector ETFs are off to a strong start in 2013 with crude oil prices rising above $98 a barrel for the first time since September.

Energy Select Sector SPDR (XLE) is up 9.2% so far this year, compared with a gain of 5.8% for SPDR S&P 500 ETF (SPY), according to investment researcher Morningstar.

“The energy sector is surging on a relative basis,” says Investors Intelligence technical analyst Tarquin Coe.

“The ratio of the XLE versus the S&P 500 is developing a potential bottom. That base would confirm on a break above the September relative high,” he wrote in a note Wednesday. “Should that occur, the ratio would be forecast to rally to at least the high from February last year, equating to some 7.5% of outperformance. Investors should be overweight the sector.”

U.S. Oil Fund (USO) has gained 22% from its 2012 low. [Oil ETFs Continue Ramp]

Crude futures in New York rose above $98 a barrel on Wednesday after bottoming around $81 in June of last year.

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Full disclosure: Tom Lydon’s clients own SPY.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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