Getting exposure to the current rally in oil prices could be as easy as seeking a pure oil play. But investors can also opt to refine their choices further with ETFs like the VanEck Vectors Oil Refiners ETF (CRAK). As the global economy continues the healing process, oil refiners could prosper.
“In 2021, the impact of seasonality on gasoline prices could be dramatic,” an Oil & Gas 360 article noted. “Last year, the global pandemic caused unprecedented demand destruction in the energy sector. As vaccines create herd immunity to the virus, people will get back in their cars, on planes, and other modes of transport that they avoided throughout 2020 and early 2021. Oil and oil product prices have been rising on rising demand for fuels and optimism over a continuation of higher requirements.”
CRAK seeks to replicate as closely as possible the price and yield performance of the MVIS® Global Oil Refiners Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index.
The index includes equity securities and depositary receipts of companies that generate at least 50% of their revenues from crude oil refining. Products of these companies may include gasoline, diesel, jet fuel, fuel oil, naphtha, and other petrochemicals.
CRAK gives investors:
- The Potential to Benefit from Low Oil Prices: An industry that may generally benefit from lower oil prices
- A Differentiated Segment of the Energy Sector: A segment that has historically interacted differently with oil prices and market dynamics than other energy segments
- A Means to Adapt to Long-Term Pressure: Oil refiners have been forced to adapt to increasing demand for clean energy and negative consumer sentiment toward plastics and environmental waste
“Gasoline is a seasonal and widely consumed oil product,” the article added. “The peak season for gasoline demand begins each year in the spring and runs through the fall as drivers put more mileage on their automobiles when the weather conditions are optimal. 2021 is shaping up to be a far better year for the gasoline market than 2020. As vaccines create herd immunity to COVID-19, life will slowly return to pre-pandemic conditions.”
CRAK Riding a Wave of Momentum
Since December 2, 2020, CRAK has had momentum squarely on its side after its 50-day moving average crossed up the 200-day moving average. In trading circles, this is known as the ‘golden cross’. The fund has been climbing since.
Momentum appears to be heading towards overbought levels as the relative strength index (RSI) is registering a level of 67.93. CRAK is up close to 60% within the past year and up 18% so far in 2021.
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