The oil markets are improving and the energy sector has strengthened on the stabilized prices, with oil refiners and sector-related ETF leading the charge this year.
The VanEck Vectors Oil Refiners ETF (NYSEArca: CRAK), the only exchange traded fund dedicated to oil refiners, increased 5.2% year-to-date, compared to the 2.7% gain in the widely observed Energy Select Sector SPDR (NYSEArca: XLE).
“I do think it is certainly worth pointing out the strong performance of the industry as a whole,” Brandon Rakszawski, Product Manager for VanEck, told ETF Trends. “Looking at the U.S. GICS Energy sub-industries, oil refining & marketing companies have led the group in performance in five of the last eight calendar years, including strong outperformance in 2017. YTD 2018 performance is equally as impressive. On a trailing basis, the oil refining and marketing sub-industry is the leading energy sub-industry based on total return for all of the YTD, 1, 3, 5, and 10-year periods through April.”
The U.S. refining sub-sector has been one of the most profitable sectors in the U.S. economy over the past five years.
Refiners Space Supported by M&A Activitiy
The strength reflected by the refiners space has also been supported by greater merger and acquisition activity as companies find themselves with more cash as oil prices rebound. For example, Marathon Petroleum Corp (NYSE: MPC) has agreed to buy rival Andeavor (NYSE: ANDV) for $23 billion, creating the largest American oil refiner just as oil prices are rising amidst growing global demand for fuels and an extended industry rally, the Wall Street Journal reports.