The S&P Oil & Gas Exploration ETF is a heavily traded name within the broader energy space. It averages almost 2x more options on a daily basis than the better known XLE: 122,000 contracts in the last month vs 76,000 for XLE , according to TradeStation data.
XOP's has been declining since early in the year and it's now trying to hold the $23 level where it peaked in early November. This sets up the potential for a break to the downside and a retest of the December lows around $20.
The energy market has struggled with a supply glut. Just this week both the EIA and the IEA had news. The EIA , part of the U.S. government, said domestic oil production passed 13 million barrels for the first time ever. Weekly data also showed big inventories of unused refined products. The IEA, a global organization, separately predicted non-OPEC supply will keep swelling.
Throw in a potential of calmer tensions in the Middle East, and the risk/reward may favor weakness in this corner of the market.