Retail investor flows into oil ETFs have been the “key force pushing commodity markets higher,” Goldman Sachs commodity research team said in a note.
In turn, by easing the free fall in the oil futures market, retail investors may have also indirectly helped support a faltering energy sector.
“By throwing billions upon billions into oil, investors in [ETFs] – as well as investors in commodities – moderated the price decrease and extended the life and production of firms that are unprofitable at $50 per barrel,” oil economist Philip Verleger said in a note.
For instance, the Energy Select Sector SPDR (NYSEArca: XLE) only dipped 1.2% this year, with WTI crude oil futures now hovering around $50 per barrel.
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