"The Energy Select Sector SPDR Fund (NYSEARCA:XLE) has surged 21.6% year to date as markets pivot from energy transition rhetoric toward energy security concerns. This performance reflects investor confidence that the fund's $33 billion portfolio of oil majors can navigate volatile crude prices and deliver returns even when commodity markets remain unpredictable. WTI crude has climbed 9.1% over the past month to $64.53 per barrel, a move that matters because it keeps integrated majors profitable despite projections of lower prices ahead."
"Three factors are preventing a collapse into the low $50s: China's strategic reserve buying, geopolitical supply risks, and stronger-than-expected summer demand. At $65, integrated majors like Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) generate solid cash flow but face earnings pressure. Analysts note both companies can support dividends and capital programs even if oil falls to $50 per barrel, thanks to low-cost assets in the Permian Basin and offshore Guyana."
XLE has surged 21.6% year-to-date as markets shift emphasis from energy transition to energy security, reflecting investor confidence in large integrated oil majors. WTI crude recently climbed 9.1% to $64.53 per barrel, supporting integrated majors' profitability despite projections of lower prices. China's strategic reserve buying, geopolitical supply risks, and stronger-than-expected summer demand have prevented a slide into the low $50s. At about $65 per barrel, Exxon and Chevron generate solid cash flow but face earnings pressure; analysts say both can sustain dividends and capital programs even if prices fall to $50 due to low-cost Permian and Guyana assets. Exxon and Chevron account for 42.5% of XLE, creating concentration risk amplified by the fund's low turnover.
Read at 24/7 Wall St.
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