Energy ETFs May Be Seeing Clearer Skies Ahead

The depressed crude oil prices have weighed on energy producers, with the upcoming earnings season expected to reveal another dismal result for the sector. However, energy exchange traded funds may see brighter days ahead as we move past a market bottom.

“Analysts currently project that both the price of oil (WTI) and the estimated earnings for the Energy sector will increase over the next several quarters,” John Butters, Senior Earnings Analyst for FactSet, said in a note.

Specifically, analysts project the average price will increase to $55.88 per barrel in the third quarter of 2017 from $46.84 per barrel in the third quarter of 2016. West Texas Intermediate crude oil futures were trading around $46.0 per barrel Monday.

The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, has declined 7.4% year-to-date.

SEE MORE: Options Activity Brisk in Oil ETFs as Crude Tumbled

Meanwhile, the projected earnings for the S&P 500 Energy sector is expected to increase to $14.0 billion Q3 2017 from $4.3 billion in Q3 2016.