Could The Energy Sector Get A Relief Rally After $2.35 Billion Head For The Exits?

Last week’s Chart of the Week looked at Large Traders getting long natural gas, and the commodity has continued to move higher - rising 6.9% on yesterday (Monday). This week’s chart looks at the other side of the coin, showing a heavy degree of selling in the energy sector, specifically energy ETFs.

The bottom panel of the chart below shows the 1-month net flows into five the major energy sector ETFs, XLE (NYSE: XLE), OIH (ARCA: OIH), VDE (ARCA: VDE), XOP (ARCA: XOP) and IYE (ARCA: IYE). For most of 2023 flows have been negative and recently intensified to more than $2.25 billion leaving the sector funds. Before 2018 we’d have to zoom out to 2008 to find an instance of this degree of money leaving the energy sector. In this week’s chart I’ve marked vertical red lines when the aggregate outflows surpass $2.25 billion. The response in XLE has been generally positive in the short-term, with several occurrences seeing a move higher.

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