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The energy sector remains the outperformer to start the New Year as oil prices are rising further on supply disruptions and unprecedent demand. In fact, Brent and WTI are on track to register a 6% gain in the first week of the year, with prices at their highest since late November.
Given this, energy ETFs are rallying, with SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) being the major beneficiary of the oil price surge. It is followed by VanEck Vectors Oil Services ETF (OIH - Free Report) , iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report) , Invesco Dynamic Oil & Gas Services ETF (PXJ - Free Report) and Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) .
The solid gains are coming as the escalating unrest in Kazakhstan has accelerated supply concerns. Kazakhstan is currently producing 1.6 million barrels of oil per day. The supply outages in Libya have added to the chaos. Libyan oil output is down by more than 500,000 barrels per day due to pipeline maintenance and oilfield shutdowns. Per the National Oil Corp., Libyan oil output is at 729,000 barrels per day, down from a high of more than 1.3 million bpd last year (read: Energy Emerges the Best Sector of 2021: 5 ETFs Up At Least 70%).
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, are sticking to their planned output increase by 400,000 barrels per day in February rather than boosting it further. The OPEC+ has been increasing output by the same amount each month since August. On the demand side, increasing COVID-19 vaccination rates, loosening pandemic-related restrictions, and a growing economy have bolstered the demand for energy.
Added to the strong momentum is the state of backwardation in the oil futures market, where later-dated contracts are cheaper than the near-term contracts. 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.
We profiled the above-mentioned ETFs below:
SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) – Up 13.3%
SPDR S&P Oil & Gas Equipment & Services ETF 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. It holds 29 stocks in its basket with AUM of $139.1 million (read: 5 ETFs Soaring to Start 20220).
SPDR S&P Oil & Gas Equipment & Services ETF charges 35 bps in fees per year from investors and has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
VanEck Vectors Oil Services ETF tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. It holds 25 stocks in its basket.
With AUM of $2.5 billion, VanEck Vectors Oil Services ETF charges 35 bps in annual fees. The product has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report) – Up 12.4%
iShares U.S. Oil Equipment & Services ETF offers exposure to U.S. companies that provide equipment and services for oil exploration and extraction. It follows the Dow Jones U.S. Select Oil Equipment & Services Index, holding 24 stocks in its basket.
iShares U.S. Oil Equipment & Services ETF has amassed $111.3 million in its asset base while charges 41 bps in fees per year from investors. It has a Zacks ETF Rank #3 with a High risk outlook.
Invesco Dynamic Oil & Gas Services ETF (PXJ - Free Report) – Up 11.3%
Invesco Dynamic Oil & Gas Services ETF follows the Dynamic Oil Services Intellidex Index, which thoroughly evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value. It holds 16 stocks in its basket.
Invesco Dynamic Oil & Gas Services ETF has accumulated $23.5 million and charges 63 bps in fees per year. It has a Zacks ETF Rank #5 with a High risk outlook.
Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) – Up 10.6%
Invesco Dynamic Energy Exploration & Production ETF follows the Dynamic Energy Exploration & Production Intellidex Index, which thoroughly evaluates companies involved in the exploration and production of natural resources used to produce energy based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value (read: Take a Look at Top-Performing ETF Sectors of 2021).
Holding 32 stocks in its basket, Invesco Dynamic Energy Exploration & Production ETF has amassed $145 million in its asset base and charges 63 bps in annual fees. It has a Zacks ETF Rank #3 with a High risk outlook.
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5 Energy ETFs Making the Most of Oil Price Surge
The energy sector remains the outperformer to start the New Year as oil prices are rising further on supply disruptions and unprecedent demand. In fact, Brent and WTI are on track to register a 6% gain in the first week of the year, with prices at their highest since late November.
Given this, energy ETFs are rallying, with SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) being the major beneficiary of the oil price surge. It is followed by VanEck Vectors Oil Services ETF (OIH - Free Report) , iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report) , Invesco Dynamic Oil & Gas Services ETF (PXJ - Free Report) and Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) .
The solid gains are coming as the escalating unrest in Kazakhstan has accelerated supply concerns. Kazakhstan is currently producing 1.6 million barrels of oil per day. The supply outages in Libya have added to the chaos. Libyan oil output is down by more than 500,000 barrels per day due to pipeline maintenance and oilfield shutdowns. Per the National Oil Corp., Libyan oil output is at 729,000 barrels per day, down from a high of more than 1.3 million bpd last year (read: Energy Emerges the Best Sector of 2021: 5 ETFs Up At Least 70%).
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, are sticking to their planned output increase by 400,000 barrels per day in February rather than boosting it further. The OPEC+ has been increasing output by the same amount each month since August. On the demand side, increasing COVID-19 vaccination rates, loosening pandemic-related restrictions, and a growing economy have bolstered the demand for energy.
Added to the strong momentum is the state of backwardation in the oil futures market, where later-dated contracts are cheaper than the near-term contracts. 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.
We profiled the above-mentioned ETFs below:
SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) – Up 13.3%
SPDR S&P Oil & Gas Equipment & Services ETF 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. It holds 29 stocks in its basket with AUM of $139.1 million (read: 5 ETFs Soaring to Start 20220).
SPDR S&P Oil & Gas Equipment & Services ETF charges 35 bps in fees per year from investors and has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
VanEck Vectors Oil Services ETF (OIH - Free Report) – Up 13.1%
VanEck Vectors Oil Services ETF tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. It holds 25 stocks in its basket.
With AUM of $2.5 billion, VanEck Vectors Oil Services ETF charges 35 bps in annual fees. The product has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report) – Up 12.4%
iShares U.S. Oil Equipment & Services ETF offers exposure to U.S. companies that provide equipment and services for oil exploration and extraction. It follows the Dow Jones U.S. Select Oil Equipment & Services Index, holding 24 stocks in its basket.
iShares U.S. Oil Equipment & Services ETF has amassed $111.3 million in its asset base while charges 41 bps in fees per year from investors. It has a Zacks ETF Rank #3 with a High risk outlook.
Invesco Dynamic Oil & Gas Services ETF (PXJ - Free Report) – Up 11.3%
Invesco Dynamic Oil & Gas Services ETF follows the Dynamic Oil Services Intellidex Index, which thoroughly evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value. It holds 16 stocks in its basket.
Invesco Dynamic Oil & Gas Services ETF has accumulated $23.5 million and charges 63 bps in fees per year. It has a Zacks ETF Rank #5 with a High risk outlook.
Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) – Up 10.6%
Invesco Dynamic Energy Exploration & Production ETF follows the Dynamic Energy Exploration & Production Intellidex Index, which thoroughly evaluates companies involved in the exploration and production of natural resources used to produce energy based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value (read: Take a Look at Top-Performing ETF Sectors of 2021).
Holding 32 stocks in its basket, Invesco Dynamic Energy Exploration & Production ETF has amassed $145 million in its asset base and charges 63 bps in annual fees. It has a Zacks ETF Rank #3 with a High risk outlook.