Related: Energy ETFs Are Back on Trend

Current OPEC compliance with production cut plans remains above their historical average, and it usually takes between two to three quarters for inventories to normalize after the cuts. The challenge for energy equities is that some oil market observers see more declines coming for crude. Oil traders are concerned over how fast U.S. shale oil producers will increase production to capture the rising prices.

Of course, oil prices are a major issuer for investors considering energy stocks or ETFs such as IYE.

“Since late 2015, weekly changes in crude oil have accounted for more than 50% of the variation in weekly returns. This helps explain why these sectors have performed so well of late: Both interest rates and crude oil have risen sharply in recent weeks,” according to BlackRock.

For more information on the oil market, visit our oil category.

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