Energy commodities are especially vulernable to the cycle. Specifically, the recent recovery that brought oil prices back up to $60 per barrel has triggered greater U.S. drilling – U.S. drillers added rigs last week for the first time since December. Additionally, the rebound in crude oil allowed low-cost producers to raise current and future output – the Organization of Petroleum Exporting Countries raised output to its highest level since August 2012.
The broad commodity ETFs are also susceptible to changes in oil prices as the funds are heavily weighted toward fossil fuel-related commodities. For instance, GCC includes a 18% tilt toward energy equally divided among natural gas, crude oil and heating oil. DBC includes heating oil 12.4%, light crude 12.4%, natural gas 5.5% and RBOB gasoline 12.4%. DJP holds WTI crude 9.6%, Brent crude 9.1% and natural gas 8.0%. [Pick and Choose Commodity Exposure with ETFs]
For more information on the commodities market, visit our Commodity ETFs category.
Max Chen contributed to this article.