Three Country ETFs To Buy On An Oil Price Surge

oil etfs

Crude oil prices – stuck in a relatively tight range in the first half of the year – have bounced back sharply to the triple-digit mark in the second half. The price surge was backed by seasonality and some other key factors.

First, higher oil demand is a seasonal summer trend not only in developed nations but also in emerging economies. Second, the political unrest in the Middle East could boost uncertainty and increase the likelihood of a supply disr
uption. Third, encouraging labor and retail sales data, signaling a strong U.S. economy, have added to the bullishness (read: Venezuela: The Next Black Swan for Oil ETFs?).

Further, the price rise was fueled by the latest data from the U.S. Energy Information Administration, while many foreign nations are also rebounding. China has seen solid data as of late, while European nations are also seeing decent GDP figures too.

The strength is not limited to the commodity world as a number of oil producers are also moving higher. These firms are expected to outperform as long as the commodity surges.

Key oil producing countries are also benefiting from this uptrend, as the commodity is an important driver of their overall economies. After all, oil revenues make up a big chunk of either tax revenues or GDP growth opportunities (and sometimes both) in big oil producing countries.

We have seen this phenomenon take place in a number of countries over the past few years, and with the advent of ETFs, these nations are easier to play than ever. In light of this, we have highlighted three country ETFs that could enjoy smooth trading in the months ahead should oil price rise or remain above $100 per barrel.

This trio of nations could be an interesting pick for investors who believe that oil will continue to move upward, and finally lead the commodity world higher:

iShares MSCI Canada ETF (EWC)

Canada has been a commodity-rich nation as it is the world’s sixth largest producer of crude oil and a net exporter of the commodity. Higher oil price stimulates production, investment, consumer spending and employment in the country and thus aids economic growth.

The best way to invest in Canada is the iShares MSCI Canada ETF, a product that has nearly $3.6 billion in assets. The fund tracks the MSCI Canada Index, holding just under 100 stocks in its basket.

Although financials take the top spot at 36.63%, energy makes up a huge chunk of assets accounting for over one-fifths of the total. In terms of holdings, Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia occupy the top three positions with a combined share of 19%.

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