We could see the return of $100 oil.
For one, OPEC shocked the market with an output cut of 1.6 million barrels per day. As noted by Saudi Arabia, “The Ministry of Energy official emphasized that this is a precautionary measure aimed at supporting the stability of the oil market.”
Two, summer driving season is around the corner. Three, the EIA said it expects for global demand to rise to a record high this year on the back of a recovery in Chinese consumption, as noted by Reuters. They also warned that OPEC production cuts would leave the oil market with a larger and earlier deficit than previously expected.
That being said, we’re looking for a big rally in names such as Exxon Mobil (XOM), Chevron (CVX), Occidental Petroleum (XOY), and the following ETFs.
SPDR Energy Select Sector ETF (XLE)
With an expense ratio of 0.12%, the XLE ETF provides exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries, as noted by State Street SPDR. Not only does an ETF allow for diversification, you can buy it for less.
SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
With an expense ratio of 0.35%, the ETF provides exposure to the oil and gas exploration and production segment of the S&P TMI, which comprises the following sub-industries: Integrated Oil & Gas, Oil & Gas Exploration & Production, and Oil & Gas Refining & Marketing, as noted by State Street SPDR. Some of its top holdings include Callon Petroleum, SM Energy Company, Devon Energy Corporation, EOG Resources, and ConocoPhillips, for example.
iShares Global Energy ETF (IXC)
The iShares Global Energy ETF seeks to track the investment results of an index composed of global equities in the energy sector. Some of its top holdings include Exxon Mobil, Chevron Corporation, BP PLC, Total SA, and EOG Resources.