Market Overview

Energy ETFs Ready To Spark A Rally

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The price of oil has fallen below the $80 per barrel level and hit the lowest price in several years. While this may be a positive for industries that spend large amounts of money on energy commodities, it has been detrimental to the energy-related stocks and ETFs.

The new Republican-led Senate, historical precedents and the winter months could be setting up for a year-end energy rally.

Below are a number of energy-related ETFs that could outperform when the energy commodities find their bottom.

United States Oil Fund LP (ETF)

The United States Oil Fund LP (ETF) (NYSE: USO) is an exchange-traded security designed to track the daily price movements of West Texas Intermediate light sweet crude oil delivered to Cushing, Oklahoma.

USO invests mainly in oil future contracts, and also may invest in forwards and swaps. The oil fund has a management fee of 0.45 percent.

Related Link: Farmers' Almanac Warns Of Cold Winter: 5 Tips To Lower Utility Bills

United States Gasoline Fund, LP

The United States Gasoline Fund, LP (NYSE: UGA) is an exchange-traded security that is designed to track in percentage terms the movements of gasoline prices.

It reflects the change of price in reformulated gasoline blend stock for oxygen blending, or "RBOB," for delivery to the New York harbor. It has a management fee of 0.60 percent.

Market Vectors Unconventional Oil & Gas ETF

The Market Vectors Unconventional Oil & Gas ETF (NYSE: FRAK) follows 67 publicly traded companies in the unconventional oil and gas segment, which consist of coal bed methane, coal seam gas, shale oil, shale gas, tight natural gas, tight oil and tight sands.

The top individual holdings include:

  • Occidental Petroleum Corporation with an 8.7 percent holding
  • Anadarko Petroleum Corporation at 8.3 percent
  • Eog Resources Inc coming in at 7.7 percent

The energy stocks were the subject of a significant pullback through the summer, causing FRAK to be down 9 percent over the last 12 months and 17 percent over the last six months. It has an expense ratio of 0.54 percent.

Related Link: Energy ETFs: Bargains Or Falling Knives?

Energy Select Sector SPDR Fund (ETF)

The Energy Select Sector SPDR Fund (ETF) (NYSE: XLE) tracks 45 of the largest publicly traded companies in the energy sector.

The top individual holdings include:

  • Exxon Mobil Corporation at 16.4 percent
  • Chevron Corporation at 13.5 percent
  • Schlumberger Limited. at 7.7 percent

XLE is about even over the last 12 months and down 8 percent over the last six months. Since hitting a 16-month low in early October, the ETF has rebounded 6 percent. It has a low expense ratio of 0.16 percent.

Heading into the winter months when oil is in higher demand could boost the related equities.

Posted-In: energy ETFs Fracking gas OilLong Ideas Sector ETFs Trading Ideas ETFs

 

Related Articles (UGA + FRAK)

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