Oil and Gas Exploration, Production ETF Leads Rally with 50% Advance

November 7th at 11:44am by Tom Lydon

An exchange traded fund indexed to companies focused on the exploration and production of oil and natural gas has led the bounce in equities over the past month, gaining 50% from its October low.

SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP) was down fractionally Monday but leads nonleveraged ETFs over the trailing month, climbing about 28%.

The fund was trading hands at $56.36 a share in midday trading Monday, a rise of 50% from its 52-week intraday low of $37.67, which was hit in early October.

The iShares Dow Jones US Oil & Gas Exploration (NYSEArca: IEO) is a similar ETF.

Crude futures on Monday rose to their highest level in over three months, MarketWatch reported Monday.

“Crude oil is choppy … Rumors continue to fly in Europe, as a lack of faith in Italian debt is pushing it to new record high yields,” said Matt Smith, an analyst with Summit Energy, in the report. [ETFs Rattled by Berlusconi Talk]

Oil prices have risen on the news of the European Central Bank rate cut and speculation for an increase in business productivity.

“The October jobs report, though below expectations, contains an upward revision … so it’s really not bad at all,” Gene McGillian, analyst at Tradition Energy said, in a Reuters report. “And even though the G20 did not put out any additional money to beef up the Eurozone rescue fund, their actions and those of the leaders in Europe appear to show that the region is going to push away from the edge of disaster,” McGillian said. [Oil ETFs Rise 3% After Europe Agreement, GDP]

United States Oil Fund (NYSEArca: USO) is a large ETF that invests in oil, while SPDR Energy Select Sector Fund (NYSEArca: XLE) follows large-cap energy stocks. The fund focuses about 96% of the portfolio to oil and related fields such as drilling, exploration, refining, pipelines and marketing. [Oil ETFs Jump as Crude Tops $94 a Barrel]

The latest oil inventory data estimated there were 1.8 million gallons of U.S. crude stockpiles for the last week in October. [ETF Chart of the Day: Oil]

SPDR S&P Oil & Gas Exploration & Production ETF

energy-etf

Tisha Guerrero contributed to this article.

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.