No ready spark seen for lagging US energy shares

NEW YORK, Aug 25 (Reuters): There may be little relief on the horizon for investors in US energy companies, whose shares moved from darlings to dismal performers during Wall Street's record bull run and now face a shaky global economy, doubts about fossil fuel investments and general market skepticism.
Energy has been the worst performing of the 11 S&P 500 sectors this year, the worst performer since US President Donald Trump's 2016 election and the worst performer since the US bull stock market began more than a decade ago.
As a result, the S&P 500 energy sector has its lowest weight in the overall S&P 500. SPX since at least 1995, according to Refinitiv Datastream data. It represents under 5 per cent of the benchmark index, down from over 15 per cent in mid 2008, when oil prices reached historic highs at over $140 a barrel, nearly three times current levels.
But this year, the energy sector has even failed to keep pace with oil prices, despite their traditional tendency to move in the same direction.
The poor returns raised some hope that the sector will soon find a floor that would allow it to rebound, especially those stocks with appealing dividends, but that remains to be seen.
"The view of the sector in general has gotten to a point where it's a very difficult space for institutional investors to embrace because it's been such a chronic underperformer," said Walter Todd, chief investment officer at Greenwood Capital in South Carolina.
Since the current bull run began on March 2009, the S&P 500, which many investors view as a proxy for the stock market, has soared well over 300 per cent, while the energy sector has climbed 32 per cent.
Oil prices are up relatively little over the course of the bull market, which has largely overlapped with a US economic expansion characterized by modest growth and with a boom in shale exploration that helped make the country the world's top oil producer.
This year, however, US crude prices have climbed over 18 per cent to about $54 a barrel against a 3 per cent drop for the energy sector, although there is a wide disparity in performance among the 28 S&P 500 energy stocks.