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Oil rose last week on growing optimism on stronger summer demand following the economic reopening in the United States and Europe. However, rising COVID-19 infections in India remained a concern.
In particular, the ramp-up in travel demand will lead to higher oil price. The travel market research company Destination Analysts predicts that 87% of American travelers will take a trip this summer while more than two-thirds of Americans are planning to travel this summer (Jun 1 to Aug 31), per the recent Tripadvisor survey.
Recovering factory operations, coronavirus vaccinations and declining crude inventories added to the strength. The refineries in the U.S. are running at their highest rate since the pandemic began as they gear up for the summer driving season. Further, the oil rally came on the strength in the broader commodities market.
Moreover, the state of backwardation in the oil futures market, where later-dated contracts are cheaper than the near-term contracts, continued to provide a lift to the oil price. This signals that the oil market is tightening and demand is robust, paving the way for an oil rally. This trend is likely to persist at least in the near term, acting as the biggest catalyst for the commodity (read: 5 ETFs at The Heart of the Commodity Comeback This Year).
As such, we have highlighted five ETFs & stocks that were at the forefront of the energy sector rally last week.
Best ETFs
Though many of these energy ETFs currently have a Zacks ETF Rank #4 (Sell) or 5 (Strong Sell), they seem excellent choices to play the trend at least in the near term.
This fund tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to the companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling.
This ETF offers exposure to U.S. companies that provide equipment and services for oil exploration and extraction by tracking the Dow Jones U.S. Select Oil Equipment & Services Index (read: Go Cyclical With These Leveraged ETFs).
Zacks Rank: #4 AUM: $150.5 million Expense Ratio: 0.42% Last Week Return: 18.3%
This fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of the companies engaged in the oil and gas equipment and services industry.
Zacks Rank: #5 AUM: $163.6 million Expense Ratio: 0.35% Last Week Return: 18.2%
This product follows the Dynamic Oil Services Intellidex Index, which offers exposure to companies that are engaged in the drilling of oil and gas wells; manufacturing oil and gas field machinery and equipment; or providing services to the oil and gas industry, such as well analysis, platform and pipeline engineering and construction, logistics and transportation services, oil and gas well emergency management, and geophysical data acquisition and processing.
Zacks Rank: #5 AUM: $61.6 million Expense Ratio: 0.63% Last Week Return: 16.5%
This diversified oil and gas services company is focused on completion fluids and associated products and services, water management, frac flowback, production well testing, offshore rig cooling, compression services and equipment, and selected offshore services including well plugging and abandonment, decommissioning, and diving (read: How Will Oil Service ETFs Fare This Earnings Season?).
Zacks Rank: #3 VGM Score: C Market Cap: $436.7 million Last Week Return: 34.2%
Earthstone Energy Inc.
It is an independent oil and gas exploration and production company.
Zacks Rank: #3 VGM Score: A Market Cap: $749.3 million Last Week Return: 31.8%
Image: Bigstock
Best Energy ETFs & Stocks of Last Week
Oil rose last week on growing optimism on stronger summer demand following the economic reopening in the United States and Europe. However, rising COVID-19 infections in India remained a concern.
In particular, the ramp-up in travel demand will lead to higher oil price. The travel market research company Destination Analysts predicts that 87% of American travelers will take a trip this summer while more than two-thirds of Americans are planning to travel this summer (Jun 1 to Aug 31), per the recent Tripadvisor survey.
Recovering factory operations, coronavirus vaccinations and declining crude inventories added to the strength. The refineries in the U.S. are running at their highest rate since the pandemic began as they gear up for the summer driving season. Further, the oil rally came on the strength in the broader commodities market.
Moreover, the state of backwardation in the oil futures market, where later-dated contracts are cheaper than the near-term contracts, continued to provide a lift to the oil price. This signals that the oil market is tightening and demand is robust, paving the way for an oil rally. This trend is likely to persist at least in the near term, acting as the biggest catalyst for the commodity (read: 5 ETFs at The Heart of the Commodity Comeback This Year).
As such, we have highlighted five ETFs & stocks that were at the forefront of the energy sector rally last week.
Best ETFs
Though many of these energy ETFs currently have a Zacks ETF Rank #4 (Sell) or 5 (Strong Sell), they seem excellent choices to play the trend at least in the near term.
VanEck Vectors Oil Services ETF (OIH - Free Report)
This fund tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to the companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling.
Zacks Rank: #5
AUM: $1.5 billion
Expense Ratio: 0.35%
Last Week Return: 19%
iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report)
This ETF offers exposure to U.S. companies that provide equipment and services for oil exploration and extraction by tracking the Dow Jones U.S. Select Oil Equipment & Services Index (read: Go Cyclical With These Leveraged ETFs).
Zacks Rank: #4
AUM: $150.5 million
Expense Ratio: 0.42%
Last Week Return: 18.3%
SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report)
This fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of the companies engaged in the oil and gas equipment and services industry.
Zacks Rank: #5
AUM: $163.6 million
Expense Ratio: 0.35%
Last Week Return: 18.2%
Invesco Dynamic Oil & Gas Services ETF (PXJ - Free Report)
This product follows the Dynamic Oil Services Intellidex Index, which offers exposure to companies that are engaged in the drilling of oil and gas wells; manufacturing oil and gas field machinery and equipment; or providing services to the oil and gas industry, such as well analysis, platform and pipeline engineering and construction, logistics and transportation services, oil and gas well emergency management, and geophysical data acquisition and processing.
Zacks Rank: #5
AUM: $61.6 million
Expense Ratio: 0.63%
Last Week Return: 16.5%
Invesco S&P SmallCap Energy ETF (PSCE - Free Report)
This fund offers exposure to the small-cap segment of the energy sector by tracking the S&P Small Cap 600 Capped Energy Index.
Zacks Rank: #5
AUM: $144.6 million
Expense Ratio: 0.29%
Last Week Return: 13.7%
Best Stocks
We have highlighted the best-performing stocks that currently have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Oceaneering International Inc. (OII - Free Report)
It is one of the leading suppliers of offshore equipment and technology solutions to the energy industry.
Zacks Rank: #2
VGM Score: B
Market Cap: $1.5 billion
Last Week Return: 38.2%
Tetra Technologies Inc. (TTI - Free Report)
This diversified oil and gas services company is focused on completion fluids and associated products and services, water management, frac flowback, production well testing, offshore rig cooling, compression services and equipment, and selected offshore services including well plugging and abandonment, decommissioning, and diving (read: How Will Oil Service ETFs Fare This Earnings Season?).
Zacks Rank: #3
VGM Score: C
Market Cap: $436.7 million
Last Week Return: 34.2%
Earthstone Energy Inc.
It is an independent oil and gas exploration and production company.
Zacks Rank: #3
VGM Score: A
Market Cap: $749.3 million
Last Week Return: 31.8%
PattersonUTI Energy Inc. (PTEN - Free Report)
It is one of the largest onshore contract drillers in the United States and has a large fleet of pressure pumping equipment.
Zacks Rank: #3
VGM Score: D
Market Cap: $1.6 billion
Last Week Return: 21.7%
Transocean Ltd. (RIG - Free Report)
This is the world’s largest offshore drilling contractor and a leading provider of drilling management services. (see: all the Energy ETFs here).
Zacks Rank: #3
VGM Score: B
Market Cap: $2.5 billion
Last Week Return: 18.3%
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