China’s Rising Energy Needs Could Support Oil ETFs

July 23rd, 2012 at 3:34pm by Tom Lydon

Despite ongoing worries of a slowing global market, China, the world’s second largest economy, has been increasing its energy imports to fuel domestic growth, supporting energy prices and oil related exchange traded funds.

China imported 5.6 million barrels of oil per day in the first half of 2012, up 11% year-over-year, reports Simon Hall for the Wall Street Journal. The International Energy Agency projects China’s oil imports to exceed 12 million barrels per day by 2035.

The country’s natural-gas imports from Central Asia and liquefied gas by sea rose 58% year-over-year in the first six months this year to 7.3 million metric tons.

Additionally, coal, a long exported commodity from China, is now imported into the country.

More recently, China has set its eyes on shale gas, with a target production of 6.5 billion cubic meters a year of shale gas by 2015 from scratch and generate 60 billion to 100 billion cubic meters a year by 2020 – the U.S. Energy Information Administration estimates China is sitting on 1.275 trillion cubic feet, or 36 trillion cubic meters, of recoverable shale gas, the largest reserve in the world.

On Monday, the China National Offshore Oil Corp (CNOOC) bought out Canadian producer Nexen Inc. for $15.1 billion, according to the Associated Press.

Investors interested in gaining access to the nascent shale and oil sands industries may consider the Guggenheim Canadian Energy Income Fund (NYSEArca: ENY), Market Vectors Unconventional Oil & Gas ETF (NYSEArca: FRAK) and Sustainable North American Oil Sands ETF (NYSEArca: SNDS). [Oil Sands ETFs: Alternative Energy Investments]

Or, for those looking to track the commodity prices, the United States Oil Fund (NYSEArca: USO) follows West Texas Intermediate oil and the United States Natural Gas Fund ETF (NYSEArca: UNG) tracks natural gas futures. [ETF Chart of the Day: Oil]

Read the disclaimer; Tom Lydon is a board member of the funds for Guggenheim Investments.

For more information on crude oil, visit our oil category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.