While the broader market was stuck in sideways trading in response to geopolitical risks after the downing of a Russian jet by Turkey, energy prices and sector-related exchange traded funds experienced their best single-day jump this month.
The broader Energy Select Sector SPDR (NYSEArca: XLE) gained 2.2% Tuesday. Meanwhile, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, rose 2.4% and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, increased 2.4%.
Meanwhile, WTI crude oil futures were up 2.2% to $42.7 per barrel Tuesday. Brent crude oil futures were 2.4% higher to $45.9 per barrel.
In the energy space, small-caps, exploration and services stocks were outperforming. For instance on Tuesday, the PowerShares S&P SmallCap Energy Portfolio (NasdaqGM: PSCE) jumped 5.9%, SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP) increased 3.5%, SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES) advanced 4.6%, Market Vectors Oil Service ETF (NYSEArca: OIH) rose 3.3% and iShares U.S. Oil Equipment & Services ETF (NYSEArca: IEZ) added 3.7%.
Oil-related assets were rallying Tuesday on heightened energy risks after Turkey downed a Russian jet fighter near the Syrian border. [Recovering Turkey ETF Hit With Critical Blow]
“Oil is the most affected by it. You have major pipeline infrastructure that comes through Turkey out to the Mediterranean,” John Kilduff, analyst with Again Capital, told CNBC. “You’ve got the northern Iraqi oil field controlled by the Kurds. You have a lot hanging in the balance.”