High energy prices and profitable oil-refining margins have led oil giants and Shell PLC to see record profits. Second-quarter profits for Exxon Mobil Corp. rose to $17.9 billion, while Chevron Corp. posted a profit of $11.6 billion. Shell PLC, meanwhile, reported record quarterly profits of $16.7 billion.
“The companies’ banner profits mark a significant turnaround for an industry that hemorrhaged cash and saw scores of companies file for bankruptcy following the worldwide outbreak of COVID-19 in 2020,” according to the Wall Street Journal. “Exxon and Chevron posted historic losses that year, and Exxon got booted from the Dow Jones Industrial Average while energy sunk to less than 2.5% of the S&P 500.”
Oil and gas shares outperformed the market this year, with the S&P 500 Energy index up about 35% since the start of 2022, versus a 15% drop for the broader index.
While the Invesco DB Oil Fund (DBO), the Invesco Dynamic Energy Exploration & Production ETF (PXE), and the Invesco Dynamic Oil & Gas Services ETF (PXJ) don’t hold the above-mentioned stocks, this news is still bound to have a huge impact on these energy-focused funds.
DBO provides an opportunity to get exposure to the current upside in oil prices. Additionally, investors don’t hold direct exposure to the heavy price volatility of holding positions directly in the commodity itself.
DBO seeks to track the DBIQ Optimum Yield Crude Oil Index Excess Return (DBIQ-OY CL ER), which is intended to reflect the changes in the market value of crude oil. The single index commodity consists of light, sweet crude oil. The fund invests in futures contracts to track its corresponding index.
PXE, meanwhile, seeks to track the investment results of the Dynamic Energy Exploration & Production Intellidex Index. The fund invests at least 90% of its total assets in the securities that comprise the underlying index.
According to VettaFi, PXE “offers exposure to the exploration and production sub-sector of the domestic energy market, making it a potentially useful tool for those looking to target stocks of companies responsible for discovering and accessing new deposits of oil and gas.”
Finally, PXJ seeks to track the investment results of the Dynamic Oil Services Intellidex Index. The exchange traded fund generally will invest at least 90% of its total assets in the securities that comprise the underlying index.
The underlying index that PXJ tracks is composed of common stocks of U.S. companies that assist in the production, processing, and distribution of oil and gas.
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