As the Oil and Gas Industry Recovers, "PXE" Continues to Climb

As the vaccination rollout continues globally, the oil and gas industries are thriving. Meanwhile, the Invesco Dynamic Energy Exploration & Production ETF (PXE) continues to climb as global economies heal.

“Virtually all segments of the energy sector stank the place out in 2020,” an article noted. “The average midstream company fell 31.9%. These are companies that transport and store oil and gas.”

“Integrated supermajors such as Exxon and Chevron declined 32.5%, while the largest upstream companies crashed 33.6% in 2020,” the article added further. “Meanwhile, giant refiners such as Marathon Oil, Valero Corp, and Phillips 66 fell 32.2% over the timeframe.”

However, as oil prices have not only recovered since all sub-sectors of the oil industry have flourished.

“However, all four sub-sectors have managed to turn things around, with midstream companies climbing 25.6% in Q1 2021; integrated supermajors gaining 35.7%, upstream companies gained 38.0%, while refiners returned 25.8%,” the article said further.

PXE seeks to track the investment results of the Dynamic Energy Exploration & Production IntellidexSM Index. The fund invests at least 90% of its total assets in the securities that comprise the underlying intellidex.

The intellidex is composed of common stocks of U.S. companies involved in the exploration and production of natural resources used to produce energy. These companies are engaged principally in the exploration, extraction, and production of crude oil and natural gas from land-based or offshore wells.

The fund is up about 40% in 2021 and about 71% in the past 12 months.

“PXE is part of the suite of Intellidex product from PowerShares, meaning that this ETF is linked to an index designed to outperform traditional cap-weighted benchmarks,” an ETF Database analysis said. “Those who believe this methodology has the potential to generate excess returns may find PXE to be the ideal way to access this corner of the U.S. energy market.”

PXE Chart

PXE data by YCharts

Rebound From 2020

Of course, the Organization of the Petroleum Exporting Countries (OPEC) always has a hand in oil price movements. However, the International Energy Agency (IEA) doesn’t foresee any surprises.

“According to the organization, by July, OPEC+ will still have close to 6 mb/d of effective spare production capacity, not counting 1.5 mb/d of Iranian crude currently shut in by U.S. sanctions,” the article pointed out. “IEA reckons that OPEC’s monthly calibration of supply should be enough to quickly ramp up production or lower output depending on market dynamics.”

“In other words, the biggest beneficiary of the coming demand surge will be OPEC+ as it continues to bring more of its idle capacity online back again,” the article added.

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