The S&P 500 Energy Sector is the only sector on the broad-market index sporting gains so far in 2022, but a slide in oil prices has pulled the group into one of its worst rough patches in decades.
Story Credit: Business Insider
The sector has hit its third-worst 10-trading-day decline over the last 40+ years in registering a fall of 23.7%, Bespoke Investment Group noted in tweets it posted Thursday.
“The 23%+ drop for Energy over the last two weeks has left it basically right where it was trading when Russia invaded Ukraine at the end of February,” Bespoke wrote.
The only such slumps that saw bigger drops occurred in October 2008 and March 2020 – during the global financial crisis and the early stages of the COVID-19 pandemic, respectively.
The sector, which includes oil heavyweights Exxon Mobil and Chevron, lost nearly 5% during Thursday’s session.
The energy group shot higher four months ago as oil prices soared on supply worries streaming out of the invasion of Ukraine by Russia, one the world’s top oil producers.
“The Energy Sector had gotten more than 40% above its long-term 200-day moving average at its highs on June 8th,” the firm said. “That 40%+ spread above the 200-DMA was the widest since at least 1990 for the sector.”
But the 200-DMA spread has narrowed to just 5% in two weeks time, Bespoke said.
Investors have yanked down oil prices in recent sessions, repricing them in the face of ongoing concerns about a potential recession as central banks — led by the Federal Reserve — raise interest rates to combat high inflation.
West Texas Intermediate crude on Thursday fell 2% to about $104 per barrel and Brent crude, the international benchmark, slipped to trade around $106 per barrel.
Oil prices came under more pressure this week after President Joe Biden called on Congress to suspend federal gas taxes for three months to alleviate the pressure from high gas prices for American drivers. Biden’s proposal, however, appears to have few backers on Capitol Hill.
The S&P 500 Energy Sector was still up about 32% in 2022 even with the dismal showing over the past two weeks. WTI and Brent crude oil prices were also hanging around year-to-date gains of about 37% each.
Bespoke’s rolling 10-day chart of the S&P 500 Energy Sector’s performance. Bespoke Investment Group
