The SPDR Energy Select Sector SPDR Fund (XLE), which tracks energy firms in the S & P 500, has declined 3.9% this week amid a weakness in oil prices.

The ETF, which has approximately $26.52 billion in assets under management, is on track to record its worst weekly decline since late May. The declines follow a more than 7% drop in both Brent crude and West Texas Intermediate crude prices this week, due to concerns about oversupply. Retail sentiment on Stocktwits about the XLE ETF was in the 'neutral' territory at the time of writing.

Oil prices have been pressured this week after reports said that OPEC+ and its allies could raise output by 500,000 barrels per day. The producer group has already brought back 2.5 million barrels per day (bpd) worth of nameplate capacity this year, which has pushed oil prices lower.

“If OPEC+ does go ahead and announce a 500,000 bpd increase this weekend, it's likely a big enough increase to send crude oil lower again, initially to support at $58.00, before a test of this year's lows $55.00 area,” IG analyst Tony Sycamore said. Concerns over the U.S. government shutdown curtailing economic activity and the resumption of Iraq's Kurdish oil exports are also weighing on the crude price, he added.

Among individual stocks, Occidental Petroleum has fallen 6.8% this week, following its agreement to sell its Oxychem unit to Warren Buffett's Berkshire Hathaway for $9.7 billion. However, analysts were not enthusiastic about the mega deal due to its timing.

Roth MKM analysts stated that while the sale would help the oil and gas producer reduce its debt, it could negatively impact free cash flow growth in the coming years, as the unit was expected to contribute significantly to expansion.

However, HSBC analysts upgraded the stock to 'buy' from 'hold' after noting that the share pullback from disappointment in the OxyChem sale price "presents a great buying opportunity."

Separately, oil prices edged higher on Friday following a fire at a Chevron refinery in Los Angeles County. While authorities stated that they were able to contain the fire in a specific section of the refinery, the extent of the damage to the refinery could not be ascertained yet.

The refinery is the second-biggest by capacity in California, and any prolonged shutdown is expected to cause a spike in fuel prices on the West Coast.

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