U.S. energy stocks are back on top as crude oil scores 7th straight weekly rise

WTI and Brent crude oil futures each tallied their seventh consecutive weekly gain in their longest winning streaks since February 2022, on continuing strength from reduced supply from Saudi Arabia while global demand levels remain fairly high despite weakness in China.

While oil prices have marched higher, U.S. energy stocks have rallied recently to reclaim their spot as the market’s top performer for the first time since late 2022.

The S&P 500 Energy Sector Index has climbed 9.7% in the first 29 trading days of Q3, its most promising start to a quarter since Q4 last year and the only sector sporting more than a 4% increase for the current quarter.

Two of the sector’s best performers so far in Q3: APA Corp. (NASDAQ:APA) +31.4% and Marathon Petroleum (MPC) +26.5%, which touched an all-time intraday high Friday at $149.76.

Front-month Nymex crude (CL1:COM) for September delivery settled +0.4% for the week to $83.19/bbl, while front-month October Brent crude (CO1:COM) closed the week +0.6% to $86.81/bbl.

U.S. natural gas (NG1:COM) scored its best one-week gain in about two months, with the front-month September contract +7.5% to end at $2.770/MMBtu.

ETFs: (USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (NRGU)

In its monthly market report, the International Energy Agency raised its forecast for 2024 global oil supplies while lowering demand expectations, pointing to a more balanced oil market that could cap oil prices.

The IEA said it expects oil supplies to rise by 1.5M bbl/day next year, 300K more than it was expecting last month, while seeing oil demand growing by 1M bbl/day, 100K less than last month’s forecast.

The revisions mean the IEA now expects oil demand to exceed supply by a ~200K bbl/day next year, compared with a 700K bbl/day deficit in 2023.

“Non-OPEC+ oil supply, now at its highest level ever, nearly matches the OPEC+ alliance barrel-for-barrel and looks set to do so through next year,” the IEA said, noting non-OPEC+ oil producers accounted for just 43% of all oil produced in 2017.

The Energy Select Sector SPDR ETF (NYSEARCA:XLE) was the week’s top sector performer, +4.7%.

Top 10 gainers in energy and natural resources during the past 5 days: (RNGR) +19.5%, (GEL) +18.1%, (EGY) +16.4%, (ADSE) +15.8%, (PARR) +14.8%, (GRNT) +13.3%, (CRGY) +12.7%, (GNE) +12.4%, (CEIX) +11.6%, (UUUU) +11%.

Top 5 decliners in energy and natural resources during the past 5 days: (ELIQ) -50%, (TYGO) -42.8%, (FF) -22.6%, (WPRT) -21.5%, (PLUG) -21.2%.

Source: Barchart.com