First-quarter earnings have been a slippery slope for big oil companies thus far as geopolitical challenges and receding prices may be putting the clamps on profitability for the rest of 2019.
Venezuela sanctions as well as production cuts in Canada have affected the profit margins for companies, such as industry giants Exxon and Chevron. Exxon said earnings showed a loss of $256 million in the first quarter and net income dropped to $2.35 billion, which represents its lowest in the last three years.
“It was a tough market environment for us this quarter,” said Exxon Senior Vice President Jack Williams, who oversees the company’s refining and chemicals businesses. “The margins were at historically low levels.”
Of course, the latest drop in earnings doesn’t mean big oil is hurting in any way.
“They’re still making money, but the fat margins have disappeared,” said Sandy Fielden, director of oil research for Morningstar Inc.
For investors sensing a buy opportunity in oil, here are 20 of the biggest exchange-traded funds (ETF) that cater to the commodity:
|Symbol||ETF Name||Total Assets ($MM)|
|USO||United States Oil Fund||$1,524.89|
|UCO||ProShares Ultra Bloomberg Crude Oil||$404.91|
|UWT||VelocityShares 3x Long Crude Oil ETN||$396.73|
|DBO||Invesco DB Oil Fund||$313.92|
|DWT||VelocityShares 3x Inverse Crude Oil ETN||$150.00|
|OILU||ProShares UltraPro 3x Crude Oil ETF||$138.40|
|OIL||iPath Series B S&P GSCI Crude Oil Total Return Index ETN||$102.43|
|SCO||ProShares UltraShort Bloomberg Crude Oil||$93.72|
|USL||United States 12 Month Oil Fund||$65.20|
|UWTI||VelocityShares 3x Long Crude ETN||$55.89|
|OILK||ProShares K-1 Free Crude Oil Strategy ETF||$46.32|
|USOU||United States 3x Oil Fund||$24.95|
|OILD||ProShares UltraPro 3x Short Crude Oil ETF||$20.22|
|WTIU||ProShares Daily 3x Long Crude ETN||$18.93|
|OILX||ETRACS S&P GSCI Crude Oil Total Return Index ETN||$15.54|
|DTO||DB Crude Oil Double Short ETN||$11.67|
|DWTI||VelocityShares 3x Inverse Crude ETN||$3.30|
|OLEM||iPath Pure Beta Crude Oil ETN||$2.59|
|WTID||ProShares Daily 3x Inverse Crude ETN||$2.27|
|USOD||United States 3x Short Oil Fund||$2.03|
Data via ETFdb.com as of April 26, 2019
Cyclical Sector in Jeopardy?
Will a fall in oil profits mean cyclical sectors will fall out of favor and more capital will flow into defensive sectors as 2019 wears on?
For investors looking for continued upside in U.S. cyclical sectors over defensive sectors, the Direxion MSCI Cyclicals Over Defensives ETF (NYSEArca: RWCD) offers them the ability to benefit not only from cyclical sectors potentially performing well, but from their outperformance compared to defensive sectors.
Conversely, if investors believe that U.S. defensive sectors will outperform cyclical sectors, the Direxion MSCI Defensives Over Cyclicals ETF (NYSEArca: RWDC) provides a means to not only see defensive sectors perform well, but a way to capitalize on their outperformance compared to cyclical sectors.
For more market trends, visit ETF Trends.