Energy stocks (NYSEARCA:XLE) ticked lower Friday but again topped the S&P sector leaderboard for the week, +5.1%, as crude oil futures settled at fresh seven-year highs and natural gas exploded +23% in a wild end-of-the-week burst.
Oil and gas stocks are on pace to post their best month since February 2021, as the S&P 500 Energy Index is up 18.2% so far this year.
The front-month WTI contract (CL1:COM) added 2% on the week to settle at $86.82/bbl after trading as high as $88.84, the highest intraday level since October 2014, while natural gas futures (NG1:COM) jumped 8.3% to end the week at $4.64/MMBtu.
Crude prices have gained ~15% YTD on supply worries as geopolitical tensions rise between Russia - the world's second largest oil producer and a key natural gas provider to Europe - and the West over Ukraine, as well as threats to the United Arab Emirates from Yemen's Houthi movement.
Attention also will turn to next week's meeting of OPEC and its allies, which includes Russia; the cartel is seen as likely to stick with a planned rise in its oil output target for March.
"OPEC+ production has been gradually increasing, but still not enough to keep up with demand," and if Russia invades Ukraine, "there is certainly some upside for oil, because not only could sanctions factor in, but theoretically their position in OPEC+ would be threatened too," Global X analyst Rohan Reddy told Bloomberg.