Oil, Energy, Gasoline ETFs March Higher

Oil, energy and gasoline prices march higher as energy  markets respond to Iranian tensions and improving global growth.

Iran remains in the news as the West's sanctions against the country continued and Iran responded with sanctions of its own and sabre rattling in the Persian Gulf.  Global economic reports in recent days show improvement in economic climate and Europe seems to have cooled to a slow boil, and all these factors are working together to push energy prices higher.

Iran has cut off oil sales to Britain and France while the European Union will embargo Iranian oil imports starting in June and the United States goes after Iranian oil payment infrastructure by imposing sanctions against financial transactions involving Iranian oil payments.

Oil has been on a major bull market run since hitting recent lows last October and shows no sign of abating as fundamentals and analysts' expectations point to higher prices ahead.

In mid-day Friday action, West Texas Intermediate Crude was up 2.3% to $108.54/bbl.

Iran is the Number 2 producer in OPEC with over 3 million barrels per day pumped and the possibility of a preemptive Israeli air strike continues giving global energy markets the jitters.

Gasoline has also been in a significant uptrend, however, demand reports show demand slumping below year earlier levels. Gasoline prices nationwide averaged $3.64, up 3.5% according to the American Automobile Association, up more than 10% from this time last year.

 Oil ETF Summary:

United States Oil Fund USO is a limited partnership designed to track the spot price of light, sweet crude oil (WTIC) as traded in futures contracts on the New York Mercantile Exchange.  The ETF was up 1% in afternoon trade on Friday and is up more than 10% since the beginning of February.

Vanguard Energy ETF VDE is an ETF designed to track the Morgan Stanley Capital International (MSCI) US Investable Market Energy Index.  The ETF is up more than 20% from December lows and technically is in a strong bull market but at extremely overbought levels and so subject to an intermediate correction.

Energy Select Sector SPDR Fund XLE tracks the performance of the Energy Select Sector Index which includes energy related companies in the oil, gas and energy services sector.

United States Gasoline Fund UGA is a commodity pool, limited partnership that tracks the spot price of gasoline based on the futures contract for the nearest month on the New York Mercantile Exchange and its NAV is up approximately 15% since December, 2011.

Bottom line: The energy sector is on a major tear that's making headlines.  The sector is known for extreme volatility and capability for overheating so profits can still be made but investors/traders must be nimble to sidestep and profit from the inevitable change in direction that somewhere lies ahead.

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Disclaimer:  Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.