BKR - Energy Stocks: Winners And Losers At The Beginning Of H2 2024

2024-07-04 07:32:20 ET

Summary

• The energy sector underperformed the S&P500 in Q2 2024, continuing a trend that started earlier, and this is likely to continue heading into H2 2024.
• There are a number of factors that seem to be weighing on the energy sector, although some stocks are affected more than others.
• Crude oil is hemmed in between two opposing forces, which are both trying to impose their influence on prices.
• The energy sector is likely to keep underperforming, but there is one wildcard out there that could shake up the sector.

Energy stocks continue to underperform halfway through 2024. The S&P500 rose, but that did not stop the energy sector from falling in Q2 2024 after gaining in the preceding Q1 2024. The price of crude oil fell in Q2 2024 after rising in Q1 2024, which seems to have affected energy stocks as a group. However, there may also be other factors at work that are resulting in subpar performance for energy stocks. Why we feel that, will be covered next.

Energy stocks are underperforming

The first half of 2024 was a good one for most stocks, but not so much for energy stocks. The Energy Select Sector SPDR Fund ETF ( XLE ), for instance, has underperformed with a gain of 8.72% YTD. In comparison, the SPDR S&P500 ETF ( SPY ) has gained 14.50% YTD. The latter gained in Q2 2024, unlike the former, which lost ground in Q2 2024 after rising in Q1 2024. The chart below of XLE shows how its fortunes took a turn for the worse in Q2 2024....

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