Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading
The Energy Select Sector SPDR Fund (NYSEARCA: XLE) stock price is up 11.95% over the past month, fueled by high demand for crude oil amid rising oil prices.
The XLE ETF has rallied higher since breaking out of the consolidative range on September 22, 2021, and seems set to print new yearly highs at the current rate.
XLE’s rally is being driven by analysts warnings about rising oil demand amid low supply, with some analysts suggesting that oil prices will the $100 mark in the next six months.
OPEC and its allies are set to stick to their oil output hiking plan of adding 400,000 barrels of oil daily to their current output, a figure they agreed to in July as the global economy showed vital signs of recovery.
However, the organization has been under pressure from large oil consumers, including the US and India, to increase their current supply to ease the rising crude oil prices driven by low oil supplies.
OPEC+ are meeting this week with many expecting the group to maintain their current oil output plan. Any substantial increase could see oil prices cool off, which is likely to reflect XLE’s price.
However, XLE’s stock price might be due for a pullback, given that the latest rally has formed a parabolic shape, which is usually followed by a substantial pullback. An
As tracked by the West Texas Intermediate (WTI), a barrel of US oil is currently trading at $77.71 and would have to rise by $23 to hit the $100 mark, which would be a significant rally.
Most analysts predict that XLE stock will reach a high of $65 pretty soon, representing a $10 rally from XLE’s current price, an almost 20% jump, which is a big ask.
While we cannot rule out such drastic rallies, such a rally will likely occur over a period marked by pullback and rally phases.
Meanwhile, XLE’s fundamentals appear pretty promising, but I would like to jump in on a significant pullback, not at current prices, which seem rather extended.
*This is not investment advice.
XLE Stock Price.
XLE stock price is up 11.95% over the past month after breaking out of a consolidative range.
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