Energy ( XLE ) ended February as the month's worst performer of all 11 sectors in the S&P 500, -7% , while crude oil closed with a fourth consecutive monthly decline as concerns over tighter monetary policy and swelling U.S. stockpiles outweighed optimism about improving demand in China.
Although Nymex crude ( CL1:COM ) for April delivery settled Tuesday with a 1.8% gain, the front-month contract ended -2.3% for the month at $77.05/bbl, its eighth loss in the last nine months, while April Brent crude ( CO1:COM ) closed the month -0.7% at $83.89/bbl, its seventh monthly loss in nine.
ETFs: ( USO ), ( BNO ), ( UCO ), ( SCO ), ( DBO ), ( DRIP ), ( GUSH ), ( USOI ), ( NRGU )
U.S. crude has been stuck in a $70-$80/bbl trading range since December, but with the Fed hikes priced in and the market underestimating China's recovery and India's demand strength, Saxo Bank's Ole Hansen thinks the market should be gearing up for a bounce , although in a limited range.
Goldman Sachs predicted this week that strengthening fuel demand in China and flattish supply from other producers will push the oil market into deficit in this year's H2 , leading OPEC to reverse its production cut at the June meeting.
Goldman said it sees oil prices rising gradually to $100/bbl by December, assuming OPEC raises output by 1M bbl/day in H2; if the cartel does not act, Brent likely would reach $107 by December and keep grinding higher thereafter.
U.S. crude oil U.S. oil benchmark is trading ~18% below the level seen on the eve of Russia's invasion of Ukraine a year ago .
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Energy lags February's sector standings as crude falls for fourth straight month