XLE: Mind The Gap Between Oil Stocks And Oil Prices
- The XLE ETF, dominated by Exxon and Chevron, has decoupled from WTI crude oil prices over the past 18 months, suggesting a potential profit-taking opportunity.
- At current oil prices, the P/E ratio may rise to over 20x over the next 12 months, which would be expensive for a sector that is barely growing.
- Investors are likely to be better off buying oil futures rather than the XLE, as the current ratio implies negative excess returns over the coming years.
Jeremy Poland
After being bullish the Energy Select Sector SPDR Fund ETF (NYSEARCA:XLE) since the Covid lows, I am shifting to a neutral stance due to the disconnect between the ETF and the price of crude oil, which has reached near-record
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
