Oil ETF's Big Components Forecast Rising Spending | ETF Trends

When it comes to energy sector exchange traded funds that are highly correlated to oil prices and that provide important gauges of oil companies’ spending plans, the VanEck Vectors Oil Services ETF (NYSEArca: OIH) is one of the premier funds to consider.

OIH, one of the largest oil services ETFs, is up about 28.40% this year. Rising oil prices are helping as are expectations that oil producers will spend more on equipment to extract more crude this year to take advantage of rising prices. Year-to-date, oil is one of the best-performing commodities.

Furthermore, the oil services sector gained momentum after Schlumberger (NYSE: SLB), a bellwether for the oilfield services industry, revealed quarterly revenue that topped expectations and forecasted single-digit growth in international markets for 2019, Reuters reports.

“Schlumberger said last week that investments by oil producers in international markets will increase by 7 percent to 8 percent this year, citing a 20 percent increase last quarter in offshore rig counts and growing exploration activity in Latin America, Africa and Asia,” according to Reuters.

Halliburton: Another Big Player in Oil

Halliburton (NYSE: HAL), the world’s second-largest provider of oilfield services behind Schlumberger, is also forecasting an uptick in spending.

“Oilfield service provider Halliburton Co said on Monday it expects international offshore spending to rise 14 percent in 2019, double the estimates given by sector leader Schlumberger NV for international markets overall,” according to Reuters.

OIH follows the MVIS U.S. Listed Oil Services 25 Index. That index “is intended to track the overall performance of U.S.-listed companies involved in oil services to the upstream oil sector, which include oil equipment, oil services, or oil drilling,” according to VanEck.

The ETF holds 24 stocks with Schlumberger and Halliburton combining for over 34% of the fund’s weight.

“Halliburton’s international revenue rose 11 percent in the first quarter, driven by gains in Mexico, Argentina and the Middle East. It also reiterated its expectation of high single-digit growth for 2019,” reports Reuters.

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