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The first quarter of the year is in the books. After a strong sell-off in December, the S & P 500 returned 13.1% for the quarter, its best quarterly performance in almost a decade.
According to the SPDR Select Sector Exchange Traded Funds, which divide the S & P 500 into sector index funds, each sector grew in the first quarter. The energy sector was one of the best performing sectors of the quarter.
The Energy Selection Sector (XLE) ETF SPDR (XLE) Fund follows a market capitalization-weighted S & P 500 Energy Sector Index. . This is therefore a good landmark for conservative energy investors. Some of XLE's largest holdings include ExxonMobil, Chevron, ConocoPhillips, EOG Resources and Schlumberger.
During the first quarter, the XLE generated a total return of 16.2% (dividends included). Each category in the energy sector was a winner in the quarter.
Integrated supermajors averaged 13.2% for the quarter. They were driven by ExxonMobil's 19.8% return in the quarter. Only two supermajors – Royal Dutch Shell and Total – posted a return of less than 10% for the quarter.
The 20 largest upstream companies did even better, registering an average increase of 20.3% for the quarter. Hess Corporation led the way with a gain of 49.4%, while Chesapeake Energy and Devon Energy also recorded gains of over 40%. The top 20 upstream companies all posted gains during the quarter. ConocoPhillips, the largest company in this sector, was 7.5% behind the quarter. However, in the last 12 months, ConocoPhillips has ranked second among the top 20, behind only Hess Corporation. Related: The cheapest natural gas in the world
The intermediate sector performed slightly better than the upstream ones. The Top 20 gained 20.7% for the quarter, with 17 of the top 20 posting double-digit returns. EnLink Midstream's 38.0% return led the way, but Williams, Kinder Morgan and ONEOK were not far behind. All gained at least 30% in the first quarter.
In the United States, the refining segment only includes three major companies – Marathon Petroleum, Valero and Phillips 66 – and a handful of smaller ones. The best-performing group among the refiners in the first quarter was Valero, with a total return of 14.4%. Given the 30% rise in the price of oil in the first quarter, it is not surprising that refiners are lagging behind other segments of the energy sector. Refiners generally perform worse when oil prices rise rapidly and well when oil prices are falling.
With the West Texas Intermediate price currently set at $ 60 per barrel, companies producing mainly oil will perform better than natural gas, where prices remain depressed. Natural gas inventories are historically low, but we are moving towards a lower demand season, where inventories are rebuilding.
By Robert Rapier
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