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Why XLE Has Room to Run Higher

Stock MarketsMay 17, 2021 11:30AM ET
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© Reuters. Why XLE Has Room to Run Higher

As the economy continues to open up, there is more and more demand for energy, which is great news for investors in the Energy Select SPDR ETF (XLE (NYSE:XLE)). Read more to learn why the ETF has a lot more to run in the upcoming months.

  • More than robust energy demand- US energy policy could have an opposite to the desired impact over the coming years
  • The XLE is a diversified traditional multinational energy ETF product
  • A significant comeback, but lots of room on the upside
  • XLE pays while you wait for capital appreciation
  • Three reasons crude oil could head for $100- Bullish for XLE
Prices are rising as raw material inputs are moving to multi-year or all-time highs. After making significant price bottoms in March and April 2020 during the height of “risk-off” selling during the global pandemic’s spread, prices have taken off on the upside.

In April 2020, nearby NYMEX crude oil futures fell to a record low at negative $40.32 per barrel. NYMEX crude oil’s delivery point is a pipeline in Cushing, Oklahoma, making it landlocked petroleum. As storage facilities reached capacity, there was nowhere to store the energy commodity. Those holding long positions as the nearby futures contract entered the delivery period had to sell at any price as WTI crude oil became a bearish hot potato.

Brent crude oil futures fell to a century low at $16 in April 2020. Brent is a seaborne crude oil. The potential to store oil in tankers prevented it from falling below zero.

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Why XLE Has Room to Run Higher
 

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