Underscoring the sensitivity of oil services stocks to rising crude prices, the Market Vectors Oil Service ETF (NYSEArca: OIH), the largest oil services exchange traded fund, is up 9.6% over the past three months.
The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, is higher by more than 32% over that stretch but year-to-date, OIH and rival oil services ETFs have been among the bright spots in a firming group of equity-based energy ETFs.
Related: Oil Services ETFs Can Keep Soaring
With oil prices still low, major oil producers have been aggressively cutting back costs to muddle through the lean times. For instance, Exxon Mobil (NYSE: XOM) has cut its drilling budget to a 10-year low and halted share buybacks after last year’s measures failed to counter a crash in energy prices, reports Joe Carroll for Bloomberg.
Exxon stated it will curb spending on rig leases, floating oil platforms, gas terminals and other projects by 25% this year to $23.2 billion, the lowest spending plan since 2007. The steepening cuts come off a 20% reduction in spending to $31 billion on drilling, floating platforms and gas-export terminals, compared to previous expectations of a 12% cut in spending last year.
[related_stories]Rivals to OIH include the SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES), iShares Dow Jones U.S. Oil Equipment Index ETF’s (NYSEArca: IEZ) and the PowerShares Dyanmic Oil and Gas Service ETF (NYSEArca: PXJ).