Canadian energy sector has underperformed its U.S. counterpart

This chart is simply the performance of XEG relative to XLE which is XEG/XLF.

Reference the last chart analysis for XEG – S&P/TSX Capped Energy Index Fund.

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A major reason is the Western Canadian Select price differential

The above chart plots the performance of the U.S. and Canadian energy sectors since the March, 2009 low. I am using two ETFs as a representation of the sectors: XLE – Energy Select Sector SPDR and XEG – S&P/TSX Capped Energy Index Fund. XLE gained 118% since the the March, 2009 low compared to a gain of 54% for XEG.

The divergence between the between the U.S. energy sector (XLE) and the Canadian energy sector (XEG) is evident on the above chart since late 2011. The major reason for the divergence is the crude oil price differential for Western Canadian Select caused in part by pipeline constraints.

Reference the last chart analysis for XEG – S&P/TSX Capped Energy Index Fund.

Relevant articles picked from the Web

• East Coast looks to lure oil money as Alberta discounts bite — FP — February 15, 2013
• The implications of the price differential for Western Canadian Select — January 30, 2013

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca