Invesco’s energy ETF is rallying as global oil demand reaches record levels.
Global oil demand hit a record level in June and could peak again in August, the International Energy Agency said on Friday. Demand is boosted by strong summer air travel, increased oil use in power generation, and surging petrochemical activity in China, according to the IEA.
Global oil demand looks on track to expand by 2.2 mb/d to 102.2 mb/d, its highest-ever annual level, the IEA said.
OECD demand was revised up for May and June, with overall consumption returning to growth during the second quarter after two-quarters of contraction, the IEA said. Despite concerns surrounding the economy, demand in China was stronger than expected.
Third quarter to date, oil prices have moved higher on OPEC+ supply cuts, improved macroeconomic sentiment, and high global demand.
The Invesco S&P 500 Equal Weight Energy ETF (RSPG) is handily outpacing the cap-weighted energy sector. Year to date, RSPG has climbed 7.7% while the S&P 500 Energy index has climbed 2.6%. Over three months, RSPG is up 18.7% while the cap-weighted index is up 15.7%.
RSPG is a way for investors to get balanced exposure to the energy sector. The fund’s underlying index equally weights stocks in the S&P 500 Energy index.
An equal-weight methodology can be particularly impactful in the top-heavy energy industry. In the energy sector, traditional cap weighting can result in significant concentration risk.
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