What’s Impacting Prices?
Official data from the Energy Information Administration (EIA) showed a weekly increase of 3.3 million barrels for the week ending Apr 6, against analyst expectations of a decline in inventories of 189,000 barrels. Record high domestic production and surging imports led to the massive build. However, given that weekly EIA data is quite volatile, it did not impact investor sentiment to a great extent.
Talks between OPEC member nations and Russia to extend the production cut deal over the next 10 or 20 years have been a positive factor for crude prices in recent weeks. However, the latest trends in the space go to show that oil is being driven by more than just demand factors or OPEC.
Following a chemical attack on Syria, there has been a heated exchange of words between global leaders, questioning Russia and Iran’s support to the Syrian president. President Trump threatened Russia of striking missiles on Syria, in response to Russian ambassador’s threat to strike down any American craft attacking Syria. Although he later stated that an attack is not imminent, worries in the region are greatly driving crude prices (read: Russia ETFs Hit by Sanctions and Syria Attack).
Moreover, tensions in Saudi Arabia are on the rise. Reports of a loud blast near the Saudi capital Riyadh unnerved investors. Saudi air defense forces intercepted at least three ballistic missiles fired by Yemen’s Houthis, aimed at Saudi cities. As a result, investors fearing a supply disruption are driving crude higher.
Let us now discuss a few ETFs focused on providing exposure to the space (see all Energy ETFs here).
This fund focuses on providing exposure to WTI crude by investing in listed crude futures and other oil-related futures contracts, and it may also invest in forwards and swaps.
It has AUM of $2.0 billion and charges a fee of 77 basis points a year. The fund has returned 21.7% in a year and 12.6% so far this year.
iPath S&P GSCI Crude Oil Index ETN
This fund seeks to provide futures-based exposure to WTI crude.
It has AUM of $592.3 million and charges a fee of 75 basis points a year. The fund has returned 29.2% in a year and 16.4% so far this year.
This fund focuses on providing futures-based exposure to WTI crude.
It has AUM of $488.7 million and charges a fee of 75 basis points a year. The fund has returned 24.6% in a year and 12.8% so far this year.
This fund focuses on providing exposure to Brent crude.
It has AUM of $93.5 million and charges a fee of 90 basis points a year. The fund has returned 32.0% in a year and 9.9% so far this year.
The United States Oil Fund LP ETF (USO) fell $0.01 (-0.07%) in premarket trading Tuesday. Year-to-date, USO has gained 11.41%, versus a 0.18% rise in the benchmark S&P 500 index during the same period.
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