With the price of oil rising to $40.37, there are many opportunities as far as investing in oil. ETF Trends CEO Tom Lydon appeared on “The Claman Countdown” on Fox Business Network on Tuesday to speak with anchor Liz Claman about today’s big oil jump.
With $200 billion flowing into ETFs so far this year, the state of oil shows there are energy plays to consider. As Lydon explains, following some low prices that came during the time of Covid-19, everything seems to be coming back. There’s a big supply and demand event taking place, as more of the U.S. has reopened, as well as Europe.
At the same time, when things were tough, many producers were shutting down in the U.S. So, it really is that classic case of supply and demand making a difference.
“If you do want oil, and you do feel prices are going to become more expensive, the USO is a great way to hedge your bet,” Lydon states. “More importantly, the MLP ETFs out there are those that find the pricing, the piping, and the servicing of oil flows. So, ALMP is another great ETF to consider, if you want to profit on an uptrend in the oil surge that we’ve seen recently.”
Related: Top 34 Oil ETFs
As far as risk is concerned, Lydon makes it clear that investors need to look under the hood of these ETFs if they want to know what they’re getting into. USO is all based on futures prices. The Energy Select Sector SPDR (XLE) actually features energy companies. MLPs revolves around a specific sector of the energy market. So, it all comes down to research in determining which ETF suits what one is looking for.
“The good news is,” Lydon notes, “Oil and energy are on the rebound. It’s important to diversify and not just go after what’s surging.”
With the Nasdaq currently surging, Claman shifts gears to high tech ETFs, where Lydon then speaks about the FAANG stocks and Microsoft holding 47% of QQQ. They are the stay-at-home stocks that will continue to do well during this stay-at-home period of time.
For more market trends, visit ETF Trends.