5 Non-OPEC Oil ETFs to Consider Now (XOP, RSX, EWZ)
Due to real estate constraints in the headline, we should say that we're going to look at five non-OPEC countries that have corresponding ETFs, some of which have actually outperformed Brent crude futures in 2012 and a couple of which could even offer a buffer should oil prices pullback.
Oil traders and investors know just how prominently OPEC figures into the oil equation. The 12-member cartel accounts for approximately 40% of global oil production. They can increase or decrease production as they see fit to impact prices. Worse yet, at least for Western buyers of OPEC oil, most of the cartel's 12 nations are not friendly to Western interests nor are they politically stable.
And until we get that Nigeria ETF accessing OPEC countries via ETFs is difficult. So why not consider some non-OPEC oil-rich countries that have their own ETFs?
iShares MSCI Brazil Index Fund (NYSE: EWZ) Yeah, yeah. We know what you're thinking. "Duh, Brazil has to be on this list." Fair enough, but EWZ does allocate over 21% of its weight to the energy sector. When it comes to oil, Brazil has the two best steady customers an oil exporter could hope for: The U.S. and China.
A recent pullback has some Brazil ETFs, EWZ included, looking inviting for small positions right now and if Petrobras (NYSE: PBR) could ever get out of its own way, than EWZ would be that much stronger. Remember, Brazil is just one of five countries in the world increasing its oil production. One of the others is...
Global X FTSE Colombia 20 ETF (NYSE: GXG) ...Colombia. And the good thing about Colombia and the Global X FTSE Colombia 20 ETF is that Ecopetrol (NYSE: EC), Colombia's equivalent of Petrobras, is far kinder to investors than its Brazilian counterpart. There are reasons beyond oil to be bullish on Colombia. The primary concern with GXG at the moment is that it has run up in a straight line and looks due for a pullback.
First Trust Canada AlphaDEX Fund (NYSE: FCAN) Canada is the top oil exporter to the U.S. and a friendly one at that. While the iShares MSCI Canada Index Fund (NYSE: EWC) is older and bigger than FCAN, FCAN's almost 40% allocation to the energy sector is bigger than EWC's energy exposure. With oil prices as high as they are now, the differences between FCAN and EWC cannot be ignored.
Market Vectors Russia ETF (NYSE: RSX) It's beating a dead horse at this point, but RSX and its rivals are fine ways of tapping into $100+ oil. In fact, RSX has outperformed oil futures year-to-date. Again, Russia is the world's largest oil producer. With no OPEC quota constraints and eager buyers all over the world, Vladimir Putin and friends are going to drill, baby, drill. Oddly enough, Russia needs the help of Western oil companies to tap into some of its most prized oil reserves...
SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP) Don't laugh. Guess who was a net oil exporter in 2011 for the first time since 1949? That's right, the U.S. was. It would be nice to see this trend continue and it would obviously benefit the economy. Unfortunately, there's too much of a political element to energy policy in this country and that will endanger our status as a net oil exporter.
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