As a result of the ongoing Russia-Ukraine war, the existing energy supply constraints are expected to get further escalated by the OPEC+ oil output cuts. This should serve as a tailwind for oil prices in the near term.
Despite oil prices retreating from their summer highs, investor sentiments have remained bullish around energy stocks. It is evident from the Energy Select Sector SPDR Fund’s (XLE) gains of 62.2% year-to-date, compared to the broader SPDR S&P 500 ETF Trust (SPY), which declined 18.7% over the same period.
