Oil ETFs Bounce After Goldman Points to Supply Deficit

The global crude oil supply glut may have turned into a deficit on unexpected production disruptions and higher demand, bolstering oil commodity and sector-related exchange traded funds.

Leading the charge on Monday, the PowerShares S&P SmallCap Energy Portfolio (NasdaqGM: PSCE) rose 4.0%, SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES) increased 3.7% and iShares U.S. Oil Equipment & Services ETF (NYSEArca: IEZ) gained 3.2%. The Energy Select Sector SPDR (NYSEArca: XLE), the largest energy-related ETF, added 1.8%.

Meanwhile, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, was up 2.9%, United States Brent Oil Fund (NYSEArca: BNO), which follows Brent crude oil futures, was 2.5% higher and iPath S&P GSCI Crude Oil Total Return Index ETN (NYSEArca: OIL) gained 3.6% on Monday.

WTI futures were up 3.1% to $47.7 per barrel on Monday while Brent oil futures were 2.6% higher to $49.1 per barrel.

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Crude oil strengthened after Goldman Sachs analysts Damien Courvalin and Jeffrey Currie said that a decline in production due to unexpected disruptions, along with sustained demand, have created a “sudden halt” to the output surplus, reports Serene Cheong for Bloomberg.

The shifting outlook that supply losses are leading to a rebalance was also mirrored by Morgan Stanley, Barclays Plc and Bank of America Corp.