Oil Prices Surge, But Energy Stocks Are Left Behind
Crude oil prices have surged by over 20% in just a few weeks, but energy stocks are not following suit. The State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the State Street Energy Select Sector SPDR ETF (XLE) have seen modest gains of 10.1% and 6.2%, respectively, lagging behind the year-to-date price moves in crude oil.
WTI and Brent futures have risen by 28.5% and 22.6%, while WTI is up 84% and Brent is up 79% YTD. This divergence may be due to natural gas prices, which are down over 18% this year, or the overall market's struggles with the S&P 500 Index (^SPX) lately.
Some analysts expect oil prices to retreat if Middle East tensions subside, with futures contracts for delivery in mid-to-late 2027 priced around $70. For energy bulls who think oil will remain 'higher for longer,' adding more energy stock exposure may be a viable option.