The price of oil hit a new record, and investors might be wondering which oil-focused exchange traded funds (ETFs) they should be looking at: oil services, oil companies or oil futures?
Brian Baskin for the Wall Street Journal says crude oil futures settled at $100.01. Just before closing, the March contract reached $100.10, topping January’s record by one cent.
Two factors in the surge are a weekend explosion at a refinery in Texas and reports that a Nigerian militant group threatened renewed attacks on oil facilities if the government didn’t tell them whether their leader was dead or alive.
Analysts say that oil’s residence on the $100 side could be short-lived because of indications that supplies are adequate. Here’s hoping.
With rising oil prices, which oil related ETFs have performed better – the ones that hold oil companies, or those that track the actual futures?
Surprisingly, the best way to participate recently has been to own the oil futures:
- iPath S&P GSCI Crude Oil Total Return Index (OIL): It’s up 3.5% year-to-date and up 56.7% for the last year. This is an exchange traded note (ETN) is linked to the performance of the Goldman Sachs Crude Oil Return Index, which is derived from crude oil futures.
- Oil Services HOLDRs (OIH): Year-to-date, it’s down 8.9%. It’s up 34.4% for the last year. This ETF tracks companies involved in pressure pumping and drilling oil around the world.
- United States Oil (USO): Year-to-date, it’s up 4%. For the last year, it’s up 61.9%. This fund follows oil futures.
- SPDR S&P Oil & Gas Exploration & Production (XOP): Year-to-date, the fund is up 2.6%. Over the last year, it’s up 38%. This fund tracks 35 companies involved in the production of oil.
- PowerShares Dynamic Oil & Gas Services (PXJ): It’s down 7% year-to-date and up 31.4% in the last year. This fund tracks an index made up of stocks from oil and gas equipment, services and drilling.
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.