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Energy ETFs Soar On Reopening Hopes

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Energy is the best performing sector this year, after underperforming the broader market for many years. The Energy Select Sector SPDR Fund (XLE - Free Report) has surged 41% in 2021.

The rollout of coronavirus vaccines is accelerating and expected to bring an end to this deadly pandemic. Further, the massive $1.9 trillion fiscal stimulus is expected to boost US economic growth.

Oil has also been rallying this year as Saudi Arabia had unexpectedly cut its production significantly to boost prices. Last week, oil prices jumped more than 4% after OPEC and its allies agreed to extend most of their production cuts through April.

The OPEC expects oil demand to increase by 5.9 million barrels per day year-over-year in 2021, while the supply to be largely unchanged.

The Vanguard Energy ETF (VDE - Free Report) tracks a market cap weighted index of US energy companies. Exxon (XOM - Free Report) and Chevron (CVX - Free Report) account for almost 40% of the portfolio.

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) is an equal-weighted ETF. It tilts away from the oil giants and toward small- and mid-cap companies.

The VanEck Vectors Oil Services ETF (OIH - Free Report) holds 25 largest US-listed oil services companies. Schlumberger (SLB - Free Report) and Halliburton (HAL - Free Report) are its top holdings.

To learn more about these ETFs, please watch the short video above.

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