2026 Energy Sector Outlook: Brace For Growing Oil Oversupply

KM Capital
7.51K Followers

Summary

  • Energy Select Sector SPDR Fund (XLE) is rated 'Sell' for 2026 due to anticipated sector underperformance.
  • XLE's heavy upstream exposure ties its performance closely to crude oil prices, which face major structural headwinds.
  • Slowing GDP growth in the U.S. and China, combined with rising global oil supply, is expected to pressure oil prices downward.
  • While geopolitical risks could disrupt supply, structural oversupply and weak demand should drive continued XLE underperformance.

Нефтехимический завод в Грейнджмуте ночью

georgeclerk/E+ via Getty Images

Energy Sector in 2025: substantial underperformance

We still have ten days in 2025, but I am highly confident that the Energy Sector (XLE) will finish this year among the three worst-performing sectors out of

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About XLE ETF

SymbolLast Price% Chg
XLE
44.500.66%
Post44.50
Chart
Combination chart with 2 data series.
The chart has 1 X axis displaying Time. Data ranges from 2025-12-18 09:30:00 to 2025-12-23 16:00:00.
The chart has 1 Y axis displaying values. Data ranges from 44.055 to 44.66.
End of interactive chart.
Expense Ratio
0.08%
Div Frequency
Quarterly
Div Rate
$1.44
Yield
3.26%
Fund AUM
$26.15B
Class AUM
$26.27B

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Chart
Line chart with 13 lines.
The chart has 1 X axis displaying Time. Data ranges from 2025-12-18 09:30:00 to 2025-12-24 00:50:00.
The chart has 1 Y axis displaying values. Data ranges from -0.94 to 2.52.
End of interactive chart.