Exchange traded funds (ETFs) are a way to harness the energy stocks. Energy is necessary in any economy, therefore making demand constant. Donald H. Gold in Investors Business Daily says almost every part of the oil and gas business has seen bigger volumes and profit margins: exploring, drilling, pipelines, refining, shipping. Oil prices are sensitive to the balance of supply and demand. The larger world economies will always need oil, and their demand for the commodity will only increase.

iShares Dow Jones U.S. Energy (IYE) tracks huge, integrated oil and gas stocks and its biggest holdings are mega-caps Exxon Mobil (XOM) and Chevron (CVX). These are integrated oil companies, which find and extract oil and gas deposits worldwide. The fund’s success is proof of the world’s need for fuel, up 22% this year.  Another ETF, Energy Select Sector SPDR (XLE) is up 20% year-to-date and top holdings also include XLE and CVX.

Oilchart

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.