Sizzling US energy stock rally confronts global growth worries

Sizzling US energy stock rally confronts global growth worries

Some individual energy names have delivered returns more typically seen in high-flying technology over the past decade: Exxon Mobil Corp and Chevron Corp have gained 57% and 49% year-to-date, respectively, while Occidental Petroleum Corp has soared about 140%. U.S. crude oil prices have jumped 53% year-to-date, supporting oil and gas shares even as they help spur the steepest inflation in decades.

So far, energy shares have weathered hawkish pivots from the Federal Reserve and other central banks, which have stoked worries about slowing growth that could crimp energy demand. Still, there are signs some investors may be taking profits: while the sector is up 11% since late April, there have been five straight weeks of net outflows for energy sector funds overall, according to Refinitiv Lipper data.

"The fundamentals have really improved this year for the group," said James Ragan, director of wealth management research at D.A. Davidson. "The risks are that if we do go into some type of deeper recession globally that you could see some demand destruction."

Investors sticking with their energy bets cite the sector’s strong earnings prospects, valuations that remain low on a historical basis and expectations oil prices will stay elevated following the conflict in Ukraine that