The price of oil fell 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.
With all that being said, 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) 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.
United States Gasoline Fund, LP
The United States Gasoline Fund, LP 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 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:
The energy stocks were the subject of a significant pullback through the summer, causing FRAK to be down 12 percent over the last 12 months and 17 percent over the last six months. It has an expense ratio of 0.54 percent.
Energy Select Sector SPDR Fund (ETF)
The Energy Select Sector SPDR Fund (ETF) XLE tracks 45 of the largest publicly traded companies in the energy sector.
The top individual holdings include:
XLE is up 2 percent over the last 12 months and down 10 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.
It is safe to say that many of the energy companies aren’t out of the woods yet. However, heading into the winter months when oil is in higher demand could boost the related equities.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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