Energy ETFs Marching Higher In The Past Week [First Trust ISE Revere Natural Gas (ETF), Market Vectors Oil Services ETF]

oil gasThe geopolitical tensions between the east and the west escalated quite significantly following Russia’s takeover of Crimea. Fears about Russia capturing other parts of Ukraine as well had sent jitters among investors. 

Both the U.S. and Europe have levied a host of sanctions on Russia for what they see as Russia’s invasion of Ukraine. Though this has adversely weighed on the performance of the equity markets, the crisis came as a blessing in disguise for some commodities.

Among others, oil and natural gas turned out to be the biggest beneficiaries considering the fact that Russia is a huge supplier of the world’s natural gas and energy needs. Moreover, Europe imports around 30% of its natural gas from Russia, making the region heavily dependent on Russian production to support their economy.

Supply outages in Nigeria and Libya also contributed to the rise in crude oil prices. The U.S. Energy Information Administration report of falling crude stockpiles in Cushing, OK further supported the upward momentum in crude.

Apart from these factors, signs of recovery in the U.S. economy raised fears of greater demand ahead, given the further boost in oil prices last week. The Bureau of Economic Analysis raised its economic growth estimate for the final quarter of 2013 to 2.6% from the second estimate that pegged GDP growth at 2.4%.

Also, better-than-expected orders for U.S. durable goods for the month of February suggested robust U.S. consumer spending ahead.

Market Impact 

These factors jointly contributed to the spike in oil spot prices last week, which rose 2.09% to close at $101.63 per barrel. Moreover, natural gas spot price spiked up 3.92% last week to close at $4.48 per cubic foot (read: 3 Oil ETFs Stand Out on Russian Tensions).

The boost in prices of oil and natural gas served to benefit energy ETFs as well. Energy ETFs saw a huge surge in inflows, with investors anticipating this sector to gain momentum in the near future.

In fact, energy ETFs were the best performers last week in the domestic market, with all the top 5 gainers being energy funds.  Below we have highlighted 3 energy ETFs that have soared the most in the past week:

ISE-Revere Natural Gas Index Fund (NYSEARCA:FCG)

Launched in 2007, FCG focuses on companies involved in the exploration and production of natural gas and tracks the ISE-REVERE Natural Gas Index for this purpose.

The fund holds only U.S. listed companies and chooses stocks based on four different factors including price/earnings ratio, price/book ratio, return on equity and the correlation to natural gas futures prices.

As a result of this focus, this equal-weight fund holds a basket of 30 stocks. Penn Virginia Corporation, Stone Energy Corporation and Comstock Resources, Inc. are the top three holdings of the fund.

The fund has gained 3.76% in the past one week and is up 4.86% in the past one month.

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