For the first time in more than two years, oil prices have topped the psychological $100 a barrel level, sending energy exchange traded funds (ETFs) flying.
Some of the top energy ETFs moving today are up by 3% or more:
- PowerShares S&P SmallCap Energy (NYSEArca: XLES)
- SPDR S&P Oil & Gas Exploration & Production (NYSEArca: XOP)
- iShares Dow Jones U.S. Oil & Gas Exploration & Production (NYSEArca: IEO)
- PowerShares Dynamic Energy (NYSEArca: PXE)
Energy stocks have generally outperformed the broader stock market in recent months, buoyed by oil prices that were already at the $90-a-barrel mark. If oil keeps doing this, energy stocks could have an even better 2011. [Oil ETFs: Two Ways To Get Your Fix.]
The one big reason that prices could go higher? U.S. economic growth is projected at 3-3.5% for the year, and energy prices are correlated with that growth.
Unfortunately, energy prices are an area in which predictions are especially hard to make. Nobody is calling for $140 barrels of oil just yet, but most can agree that prices have some room to the upside.
That won’t come without a cost, though. Elliot H. Gue for Investing Daily reports that higher energy prices may weigh on consumer spending, but $100 oil isn’t some wild card that will suddenly wreck household budgets. It certainly sounds an alarm, though. [Investing in Energy With ETFs.]
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.