Energy Stocks Fall Despite $100 Oil as Export Recovery Takes Hold

Oil prices above $100 a barrel have generally been seen as positive for energy stocks. However, the Energy Select Sector SPDR Fund (XLE) fell 1.59% on Tuesday, making it the worst-performing S&P 500 sector ETF.

This divergence comes even though Brent crude remains above $100 a barrel and Treasury yields are near multi-year highs. The key reason for XLE's decline is that energy stocks are responding to changes in oil prices rather than just the price itself.

Brent's recent retreat suggests Middle Eastern crude exports are recovering, which reduces some of the premium embedded in crude prices. Saudi Arabia has resumed shipments through its East-West pipeline and September exports from major Middle Eastern producers climbed to 12.8 million barrels per day, the highest since February, according to Kpler data cited by Reuters.

XLE is heavily concentrated with Exxon Mobil Holdings Corp (XOM) and Chevron Corp (CVX) together accounting for roughly 32% of the ETF. This means moves in a handful of mega-cap energy stocks can have an outsized impact on XLE's performance.