Market Overview

Oil Services ETFs Soar To 4-Month Highs

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Oil Services ETFs Soar To 4-Month Highs

The rebound in energy-related stocks continues to gain steam as many oil and gas equipment services companies recently touched four-month highs.

After bottoming in March, the United States Oil Fund LP (ETF) (NYSE: USO) has gained more than 28 percent and challenged many bearish predictions that crude oil prices would continue their unabated slide. USO tracks the daily spot price of West Texas intermediate light sweet crude oil futures and is the most heavily traded oil-related ETF on a daily basis.

Highlight On Market Vectors Oil Services

The strength in this liquid commodity has transformed the beaten down Market Vectors Oil Services ETF (NYSE: OIH) into a powerhouse industry during the month of April. OIH is dedicated to 25 of the largest U.S.-listed oil services companies and has $1.3 billion in total assets.

Related Link: Here's The Best And Worst Hedged Oil E&Ps Beyond 2015

This ETF has gained 16 percent in the month of April and over 22 percent from the March low that coincided with oil prices. Despite fresh volatility in the broad market, OIH has continued to key in on the momentum in crude oil and recently hit new year-to-date highs.

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Some of the top holdings in OIH include: Schlumberger Limited. (NYSE: SLB), Halliburton Company (NYSE: HAL) and Baker Hughes Incorporated (NYSE: BHI). These companies are generally involved in supportive equipment and services to large oil refinery and integrated oil stocks.

Investors have begun to take notice of the recent strength in OIH as well. So far this year, over $300 million in new assets have flooded into this exchange-traded fund as an obvious bet on a turnaround from the pernicious declines it experienced last year.

Sector Peers

Other ETFs that have also benefitted from this strength include the iShares Dow Jones US Oil Equip. (ETF) (NYSE: IEZ) and SPDR S&P Oil & Gas Equipt & Servs. (ETF) (NYSE: XES).

Both of these funds track a broader subset of nearly 50 stocks, yet with distinct differences in asset allocation. IEZ tracks a market capitalization weighted index, while XES is a modified equal weighted group of stocks.

The one area of concern in the oil and gas space has been the continued declines in the United States Natural Gas Fund, LP (NYSE: UNG). A turnaround in natural gas prices and further strength in crude may ultimately help boost the share prices of these stocks even further.

 
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