Despite the efforts from the Organization of Petroleum Exporting Countries, crude oil prices have plunged as the global glut comes back into focus, weighing on energy producers and services. However, one energy sector exchange traded fund has largely brushed off lower oil prices.
The VanEck Vectors Oil Refiners ETF (NYSEArca: CRAK), the first dedicated exchange traded fund play on oil refiner equities, has increased 9.5% year-to-date, whereas the widely observed Energy Select Sector SPDR (NYSEArca: XLE) fell 9.8%, as West Texas Intermediate crude oil prices fell to $45 per barrel from close to $54 per barrel at the start of the year.
Unlike the rest of the energy sector, oil refiners use crude oil as an input. Consequently, the lower prices are good for refiners, Brandon Rakszawski, ETF Product Manager for VanEck, told ETF Trends in a call.
Energy Information Administration data revealed that refiners have ramped up production rates to the highest since November 2015 to quickly process a record amount of crude oil this year, especially with the seasonal spring cleaning coming to an end.
After the spring period when refiners typically fine tune operations and finish maintenance on facilities, refining companies typically hike production of refined gasoline ahead of the high-demand summer driving months.