Energy-related exchange traded funds climbed Thursday as U.S. economic growth and rising fuel consumption helped mollify some fears of a global slowdown.
Among the best-performing non-leveraged ETFs on Thursday, the Invesco DWA Energy Momentum ETF (PXI) gained 5.2%, the SPDR Oil & Gas Equipment & Services ETF (XES) advanced 5.1% and the iShares U.S. Oil Equipment & Services ETF (IEZ) increased 4.9%. The broader Energy Select Sector SPDR (XLE), the largest equity-based energy exchange traded fund, was up 2.7%.
Meanwhile, the United States Oil Fund (USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (BNO), which tracks Brent crude oil futures, were up 3.0% and 3.6%, respectively. WTI crude oil futures were up 2.8% to $90.5 per barrel, and Brent crude gained 3.1% to $96.6 per barrel.
“Oil prices rallied after another round of impressive U.S. economic data boosted optimism for an improving crude demand outlook,” Edward Moya, senior market analyst at data and analytics firm OANDA, told Reuters, adding that the Organization of Petroleum Exporting Countries will likely try to arrest the pullback in oil prices.
Fueling the positive sentiment, American filings for unemployment benefits dipped last week, with the prior period’s data downwardly revised, reflecting a strong labor market.
Meanwhile, the new secretary general of OPEC, Haitham Al Ghais, told Reuters that the high energy prices are not a result of the cartel’s output production but due to policymakers, lawmakers, and insufficient oil and gas sector investments. The global markets are still vulnerable to a potential supply squeeze due to a lack of spare capacity
“We are running on thin ice, if I may use that term because spare capacity is becoming scarce. The likelihood of a [supply and price] squeeze is there,” Al Ghais stated, according to Fox Business.
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