$Energy Select Sector SPDR Fund(XLE)$Global energy demand continues to expand steadily, driven by population growth, productivity growth and improving living standards. It’s estimated that we require 3x energy over the next 20 years. Oil demand is going up even with all the EVs, net zero carbon pledges and subsidies etc.

However, capex spending on oil and gas has more than halved since 2014! There is a significant underinvestment due to all the ESG protocol and the growing pressure to decarbonise. Years of underinvestment leads to lower production of oil and natural gas, which will lead to sustained higher price for oil in the longer run.

Hence, I like $Energy Select Sector SPDR Fund(XLE)$ as I expect oil prices to be high on the back of tighter market conditions in 2023. It will be a good hedge against persistently high inflation.