Renewed Energy in 2020

06 January 2020

Energy is a new theme for 2020. It was the worst-performing sector last year, almost 20% behind the market average in most major markets, and did not act as a hedge to geopolitical tensions, which it has done at times in the past (when there have been concerns over security of oil supply). The price of crude oil fared relatively better, up 27% in 2019, placing it amongst the best-performing commodities.

Several factors turned in the sector’s favour late in 2019, however, which may act as tailwinds in the coming months. These factors included the productive outcome of the 7th OPEC+ meeting, the relative success of the Saudi Aramco IPO and improved forecasts for the global economic outlook. Institutional investors took notice and started to buy from underweight positions.

The recent US air strike on Iran raises fears around oil supply from the most important crude-producing region. This development follows the agreement from OPEC+ to reduce its output target by a further 500,000 barrels per day and, together with a slower rate of growth from US shale production, we are now more positive on the supply side of the oil price equation (although longer-term OPEC+ compliance must come with a word of warning given past violations).

On the demand side, we are heartened by better economic forecasts and possible resolution to the US-China trade war, which should revive international trade, demand from transport and industry and use of the raw material for chemical products. China, which is an important determinant for global oil and gas demand, should continue to drive electrification.

In order to benefit from higher oil prices, the large E&P companies need to remain disciplined in their capacity response. Increasing shareholder value is reliant on the oil companies continuing to reduce capital expenditure. A better outlook is reflected in strong earnings growth for 2020 but not yet in Energy sector valuations.

To read more about our 2020 equity themes, please read our recent note.

 Decomposition of Oil Price Dynamics  

Source: State Street Global Markets, New York Fed, as of 30 December 2019. The chart shows the weekly Brent crude price change; it always equals the change explained by demand factors plus the change explained by supply factors plus a residual (that unexplained by the sum of the estimated demand and supply factors).


European-Domiciled ETP Segment Flows (Top/Bottom 5, $mn)

European-Domiciled ETP Asset Category Flows ($mn)

Sources: Bloomberg Finance L.P., for the period 26 December 2019 – 2 January 2020. This information should not be considered a recommendation to invest in a particular sector or to buy or sell any security shown. It is not known whether the sectors or securities shown will be profitable in the future.

Fund Details

Fund Name SPDR MSCI World Energy UCITS ETF

SPDR S&P  US Energy Select Sector UCITS ETF

Share Class Currency  USD USD
Primary Ticker  WNRG (Euronext) ZPDE (Deutsche Börse)
Other Tickers



Borsa Italiana: WNRG

Euronext: WNRG
Bolsa Mexicana de Valores:WNRGN



Borsa Italiana: SXLE

Euronext: SXLE
Bolsa Mexicana de Valores:SXLEN

TER (%) 0.30% 0.15%
Index Name  MSCI World Energy Index S&P Energy Select Sector Daily Capped 25/20 Index
No. of Index Constituents  67 28
Portfolio Construction  Full physical replication Full physical replication
Income Treatment  Accumulation Accumulation


Source: State Street Global Advisors, Bloomberg Finance L.P., as of 31 December 2019. Characteristics are as of the date indicated and should not be relied on thereafter.

Annualised Performance (%, Unhedged, in USD)

Source: State Street Global Advisors, as at 31 December 2019. Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, so you may have a gain or loss when shares are sold. Current performance may be higher or lower than that quoted. The contained performance data do not take account of the commissions and costs incurred on the issue and redemption, or purchases and sale, of units. Visit for most recent month-end performance. The performance figures contained herein are provided on a net of fees basis. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Performance returns for periods of less than one year are not annualised. Some of the products are not available to investors in certain jurisdictions. Please contact your relationship manager in regards to availability.

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