Oil ETFs: Play the World’s Hunger for Energy

November 10th at 12:00pm by Tom Lydon

110_F_2806289_8eNghzWo7znwblv56lQis2ZrWBUmRF Forecasts about the world’s demand for energy are getting dire. We’ve got a big appetite now, but it’s about to get much, much bigger. The increased pressure could be good news for energy-related exchange traded funds (ETFs).

Worldwide energy demand is forecast to rise by about 40% between now and 2030. According to the International Energy Agency, the supply of oil will need to hit 130 million barrels per day by then, up from the 85 million barrels produced per day in 2008.

Polya Lesova for MarketWatch reports that energy demand will be vastly different should countries limit the long-term concentration of greenhouse gases in the atmosphere to 450 parts per million of carbon-dioxide equivalent. If that’s the case, energy demand would grow by 20% in that time frame.

Spencer Swartz for The Wall Street Journal reports that a new global climate deal limiting the carbon emissions could cut oil consumption in years ahead and tap into alternative energy uses. This would cut global crude demand by about 4 million barrels per day. (Why oil’s run may not be over with).

Meanwhile, crude oil is moving as Hurricane Ida weakens and a  stronger dollar reduces the appeal of commodities to investors looking for an inflation hedge. Severe storm damage is not expected and the dollar is up lightly against other major currencies. (Why oil ETFs lag oil prices).

  • United States Oil (NYSEArca: USO): up 22.4% year-to-date

  • PowerShares DB Oil (NYSEArca: DBO): up 44.4% year-to-date

  • iShares Dow Jones U.S. Oil & Gas Exploration (NYSEArca: IEO): up 37.8% year-to-date

For more stories about oil, visit our oil category.

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.