As oil prices continue to rise, energy sector exchange traded funds are rebounding. However, investors should remain cautious on any overzealous behavior if the industry opens up the oil floodgates too quickly.
Since the March lows, the United States Oil Fund (NYSEArca: USO) has surged 28.3%. West Texas Intermediate oil futures are now hovering around $59.4 per barrel.
Meanwhile, the Market Vectors Unconventional Oil & Gas ETF (NYSEArca: FRAK), which includes North American hydraulic fracturing companies, has increased 15.6% since the March low while the broader Energy Select Sector SPDR (NYSEArca: XLE) gained 10.8%.
Restarting their operations, shale explorers like EOG Resources (NYSE: EOG) and Pioneer Natural Resources (NYSE: PXD) are preparing to bounce back from the most severe slowdown in U.S. oil drilling on record, reports Lynn Doan for Bloomberg.
FRAK includes a 6.9% tilt toward EOG and 3.8% in PXD.
However, with more drillers coming back online, some observers are worried that the market could experience a double dip.