For investors seeking momentum, iShares U.S. Oil & Gas Exploration & Production ETF (IEO Quick QuoteIEO - Free Report) is probably on radar. The fund just hit a 52-week high and is up 198% from its 52-week low price of $17.63/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

IEO in Focus

This ETF offers exposure to U.S. companies that are engaged in the exploration, production, and distribution of oil and gas. It is home to 38 securities with a double-digit allocation to the top two firms, while the others hold less than 9% share. It charges 42 basis points in annual fees (see: all the Energy ETFs here).

Why the Move?

The energy segment of the broad market has been an area to watch lately given the soaring oil prices. Brent jumped to $71 per barrel for the first time since January 2020 while U.S. crude hit the highest in more than two years. The ramp-up in energy demand due to swift global economic recovery expectations as well as tightening supply conditions are providing a boost to the energy prices. Adding to the positive sentiment is the state of backwardation in the oil futures market, where later-dated contracts are cheaper than near-term contracts. This signals that the oil market is tightening and demand is robust, paving the way for an oil rally. All these fundamentals have set the stage for a strong rally in the energy stocks and ETFs for the near term.

More Gains Ahead?

Currently, IEO has a Zacks ETF Rank #3 (Hold) with a High risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank. So, there is definitely some promise for those who want to ride this surging ETF a little further.

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