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XOP

A Foolish Take: Energy Stocks Have Plenty of Room to Run

Price of crude oil compared to share price of E&P company ETF.

The energy sector has rebounded over the past year in lockstep with improving crude oil prices . It looks like there's more room to climb.

Price of crude oil compared to share price of E&P company ETF.

Image source: Ycharts.

The SPDR S&P Oil & Gas Exploration and Production ETF (NYSEMKT: XOP) tracks shares of companies that actively look for and produce oil and natural gas, and it demonstrates the sector's correlation with oil prices.

There's no guarantee that oil prices will rebound any time soon. When oil topped out at $40 per barrel in the late 1970s and then started moving lower, it took 25 years for prices to regain that level for good.

Yet long-term investors know that the energy markets are cyclical, and they tend to reward those who are patient. Energy companies could see a lot more upside in the long run.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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