Good News for Oil Services ETFs Ahead?

With oil prices rebounding last year, it was not surprising to see oil services stocks and exchange traded funds in rally mode as well.

For example, the VanEck Vectors Oil Service ETF (NYSEArca: OIH) and the SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES) posted 2016 gains of 27.8% and 28.4%, respectively.

As crude oil prices rebound, shale hydraulic fracturing companies could increase spending on exploration and production next year, supporting further gains in energy services-related exchange traded funds.

On Thursday, Credit Suisse upgraded several oil services providers, including some of the names found in OIH, the largest oil services ETF, and XES.

“The cyclical recovery is underway for onshore North America. It will accelerate in 2017 with higher utilization and pricing. Onshore international will begin to improve by mid-2017. Offshore remains challenged, but there are select early-cycle stocks that deserve a look,” said Credit Suisse in a note posted by Barron’s.

Rivals to OIH and XES include the iShares U.S. Oil Equipment & Services ETF (NYSEArca: IEZ) and the PowerShares Dyanmic Oil & Gas Services Portfolio (NYSEArca: PXJ).