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Oil Logs Best Month in July in Over a Year: ETF Winners

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WTI crude ETF United States Oil Fund LP (USO - Free Report) jumped about 15% in July while United States Brent Oil Fund, LP (BNO - Free Report) gained about 14%. Hence, July marked the best month for oil in more than a year. The price of oil remained strong as global crude consumption is expected to rise.

Inside Rising Oil Prices

West Texas Intermediate (WTI) oil topped the level of $80 per barrel, indicating a robust pricing environment. Positive projections for global oil demand, a weaker U.S. dollar, and ongoing supply cuts from OPEC+ have contributed to these price trends.

The recessionary fears are ebbing in the United States. The American economy surprisingly picked up steam in the second quarter, thanks to resilience among consumers and businesses in the face of high interest rates. This is especially true as the GDP grew 2.4% annually from 2% growth in the first quarter (read: 5 ETFs to Ride On Solid Q2 Economic Growth).

U.S. fuel demand increased to 20.78 million bpd in May, the highest since August 2019. The data from the Energy Information Administration also revealed that gasoline demand surged to 9.11 million bpd, the highest since June 2022, as quoted on CNBC.

U.S. investors now expect a possible tightening of U.S. crude supplies. U.S. crude oil and gasoline stockpiles are expected to have fallen last week, according to a Reuters poll which projected on average that crude inventories dropped by about 900,000 barrels in the week to July 28.

Analysts expect Saudi Arabia to extend its voluntary oil output cut of 1 million barrels per day, or bpd, for another month to include September to provide extra support for the market during a virtual meeting with other major producers set for Friday, as quoted on CNBC.

In June, the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, known as OPEC+ agreed on a broad deal to limit oil supply into 2024, and Saudi Arabia pledged an additional voluntary cut for July. On July 3, Saudi Arabia said the cut would include August, adding that the cuts may be extended further.

Against this backdrop, below we highlight a few energy ETF winners of the last month.

Winning ETFs in Focus

SPDR S&P Oil & Gas Equipment & Services ETF (XES - Free Report) – Up 23.4%

VanEck Oil Services ETF (OIH - Free Report) – Up 21.8%

Invesco Dynamic Oil & Gas Services ETF (PXJ - Free Report) – Up 21.3%

iShares U.S. Oil Equipment & Services ETF (IEZ - Free Report) – Up 20.9%

Invesco S&P SmallCap Energy ETF (PSCE - Free Report) – Up 18.8%

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