However, as the markets shift to the new paradigm, we may continue to experience bouts of volatility along the way before seeing prices continue to improve toward the later half of the year.
“We’ve got the Saudi announcements that are propping up the market right now,” Love said. “The number is going to start coming and, and as we get into spring, will really get the real numbers with adjustments
ETF investors can access the energy market through a number of options to tactically or strategically position their investment portfolios.
For targeted market exposure, the United States Oil Fund (NYSEArca: USO) tracks West Texas Intermediate crude oil futures and the United States Brent Oil Fund (NYSEArca: BNO) tracks Brent crude oil futures. The United States Natural Gas Fund (NYSEArca: UNG) allows investors track the price movements of the natural gas market.
Additionally, investors can also gain broad commodities market exposure through something like the United States Commodity Index Fund (NYSEArca: USCI).
Potential investors, though, should be aware of the risks in investing in the futures market, notably the effects of contango and backwardation. USCI eschews rolling front month contracts, which can lead to underperformance, especially in a contangoed market, rebalancing each month and selecting the most-backwardated contracts and then the seven highest-returning contracts.