It seems like the skyrocketing cost of energy is getting more headlines than Britney Spears, and the related exchange traded funds (ETFs) can’t seem to decide what they want to do about it.
The iShares Dow Jones US Energy (IYE) has long benefited from the price of oil. But lately, this doesn’t seem to have been the case, reports Don Dion for Seeking Alpha. The reason for this may be that while oil is at all-time highs, the recent prices have more to do with speculation. It could be why IYE just isn’t buying it and keeping pace.
Consider that high oil prices have resulted in record gains for oil and
natural gas companies, not the stocks. Be weary of a sharp drop in oil
prices, which is not that unlikely, from slower economic growth and new
supplies from Saudi Arabia. The fund is down 2.9% year-to-date.
The iShares Dow Jones U.S. Oil & Gas Exploration (IEO) has fared better, up 6% year-to-date, but it’s more focused on the exploration and production areas of oil (hence the name).
U.S. Oil (USO) is up 10.4% year-to-date.
Oil went higher today in the wake of bad jobs data this morning, reports Polya Lesova for Market Watch. While the unemployment rate rose to 5.1%, its highest level since September 2005, oil rose to $105.81 a barrel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.