Energy stocks up again as oil futures end week at fresh seven-year high (NYSEARCA:XLE)

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Oil and gas was the stock market’s standout sector performer again this week, with the top energy ETF (NYSEARCA:XLE) +5%, as a severe winter storm in Texas added to a host of global supply concerns that lifted oil prices to fresh seven-year highs.

Meanwhile, the average price of gasoline also surged to more than seven-year highs, posing a challenge to President Biden as he tries to combat soaring fuel costs.

Higher prices are driving producers to scale up production: Exxon Mobil said this week that it plans to increase output from the Permian Basin by 25% this year, and Chevron is planning a 10% rise in the region.

WTI crude for March delivery (CL1:COM) closed 6.3% higher for the week at $92.31/bbl, up for a seventh straight week and the highest finish for a front-month contract since September 2014, while natural gas futures (NG1:COM) capped a wildly volatile week with a 1.4% decline to $4.572/MMbtu after surging as much as 23% a week earlier.

Big names touching multi-year highs on Friday included HES, COP, PXD, MRO, XOM, HAL, OXY, APA, EOG and VLO.

“Oil prices are rising more than fundamentals suggest,” S&P Global Platts analyst Shin Kim told MarketWatch. “Stocks are starting to build (even outside of China), refiners are heading towards maintenance season, and supply is growing at record rates, supported in large part by U.S. shale growth resuming.”

Yet supply outages from Libya to Ecuador to Nigeria have limited production of the light-sweet oil that underpins global crude benchmarks, there’s the growing geopolitical risk premium of the Russia-Ukraine crisis, OPEC+ is struggling to raise output by the 400K bbl/day it has pledged each month, and a potential Iran nuclear deal also looms over markets.

The week’s top 10 gainers in energy and natural resources: BPT +53.8%, LITM +38%, VTNR +31.2%, BATL +25.7%, EGY +24.4%, PRT +23.4%, NGL +22.7%, METC +21.7%, RES +19.9%, CORR +19.2%.

The week’s top 5 decliners in energy and natural resources: EXC -24.1%, RFP -13.1%, MARPS -12.7%, SLI -10.7%, ETRN -10.1%.


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