Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Energy ETFs Jump On Tanker Attacks: What Lies In Store?

By Zacks Investment ResearchStock MarketsJun 13, 2019 10:10PM ET
www.investing.com/analysis/energy-etfs-jump-on-tanker-attacks-what-lies-in-store-200431693
Energy ETFs Jump On Tanker Attacks: What Lies In Store?
By Zacks Investment Research   |  Jun 13, 2019 10:10PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

After solid trading in the first quarter, oil nosedived into a bear market amid worsening U.S. trade relation with China and Mexico that raised fears of global growth slowdown threatening demand. Crude is down over 22% since late April high of about $66 a barrel.

But the commodity reversed some of its losses, spiking more than 2% on Jun 13 on fear of supply disruption, following attacks on two tankers in the Gulf of Oman. It was the second time in a month that tankers have been attacked in the world's most important zone for oil supplies. The attack in Gulf of Oman, which feeds into the Strait of Hormuz, through which 40% of the world's crude shipped by sea passes has threatened oil supply at large (read: How to Trade Oil Rush With These ETFs).

The explosion in the region renewed geopolitical concerns as U.S. Secretary of State Mike Pompeo accused Iran of the attacks, calling the Islamic Republic "a threat to international peace and stability" while an Iranian official said that Tehran had "nothing to do" with the attacks. Additionally, reports that OPEC production fell to its lowest level in five years added to the strength.

The jump in oil prices also had a big impact on energy stock ETFs on the day, helping these achieve gains as well. In fact, Invesco Dynamic Oil & Gas Services ETF PXJ stole the show, climbing 4% on the day. This was followed by increases of more than 3% in VanEck Vectors Oil Services ETF (CA:OIH) , SPDR S&P Oil & Gas Equipment & Services (NYSE:XES) ETF XES and iShares U.S. Oil Equipment & Services ETF IEZ.

PXJ

This product 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 a basket of 29 stocks with AUM of $13.9 million and charges 63 bps in annual fees (read: What Went Wrong With Oil Services ETFs in May?).

OIH

This fund tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to the companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. Holding 23 stocks in its basket, it has amassed $668.7 million and charges 35 bps in annual fees.

XES

With AUM of $177.6 million, this fund 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 40 stocks in its basket and has expense ratio of 0.35% (read: Pain or Gain Ahead for Oil & Energy ETFs?).

IEZ

This ETF offers exposure to 39 U.S. companies that provide equipment and services for oil exploration and extraction by tracking the Dow Jones U.S. Select Oil Equipment & Services Index. It has been able to manage $107.5 million in its asset base and charges 43 bps in fees per year.

What Lies Ahead?

Currently, the path of oil price seems volatile. This is because supply conditions are still tight, given declines in Venezuela, Iran, potentially Libya and temporary outages in Russia. The Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia have been withholding oil supply since the start of the year to tackle global supply glut and rebalance the oil market. They are set to discuss whether to extend oil supply cuts beyond June later this month.

However, the ongoing trade worries coupled with bouts of weak data across the globe and an inverted yield curve, which suggests imminent recession, make the oil outlook gloomy. This is because factory activity contracted in the United States, Europe and Asia last month due to deepening trade dispute between Washington and Beijing, which will weigh on demand. The International Energy Agency (IEA) reduced oil demand forecast by 100,000 barrels per day to 1.2 million barrels per day for this year (read: Oil ETFs Amid Tug of War Between OPEC Deal & Trade Tensions).

Further, the above-mentioned funds have a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook, suggesting their underperformance in the months ahead.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>



Invesco Dynamic Oil & Gas Services ETF (PXJ): ETF Research Reports

VanEck Vectors Oil Services ETF (OIH): ETF Research Reports

iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports

SPDR S&P Oil & Gas Equipment & Services ETF (XES): ETF Research Reports

Original post

Zacks Investment Research

Energy ETFs Jump On Tanker Attacks: What Lies In Store?
 

Related Articles

JFD Team
Hang Seng Heading for a Lower Low? By JFD Team - Sep 24, 2021

Hong Kong’s Hang Seng traded lower yesterday after meeting resistance at 24805 levels. Overall, the index remains below the tentative downside resistance line drawn from the high...

Energy ETFs Jump On Tanker Attacks: What Lies In Store?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email