It’s been a plentiful year for the energy sector, as evidenced by exchange traded funds (ETFs) like the Invesco Dynamic Energy Exploration & Production ETF (PXE ), which is up 80% on the year.
Energy traders have to be rejoicing this year, especially after a tumultuous 2020 that saw negative oil prices at their lowest. The energy sector has seen nothing but strength thanks to a swift and strong recovery in oil prices.
This even comes as the world is making a marked shift towards renewable energy. This should tamp down on the rally in oil prices, but that hasn’t been the case in 2021 with oil prices continuing to soar.
The Bloomberg Gas Oil Subindex, for example, is up over 50% for the year. WTI Crude and Brent Crude are both over $70 per barrel, which is a far cry from their sub-zero prices last year during the height of the pandemic.
The exploration side of oil and gas hasn’t seen a pullback either.
“Oil exploration and production companies in Texas added 2,800 jobs in August as the industry continues to recover from the pandemic-driven oil bust,” a Houston Chronicle report said.
PXE Outpacing the Broad Energy Sector
Relative to the S&P 500 Energy index, PXE is about 40% higher. Overall, the fund seeks to track the investment results of the Dynamic Energy Exploration & Production Intellidex Index.
The index is composed of common stocks of U.S. companies involved in the exploration and production of natural resources used to produce energy. These companies are engaged principally in the exploration, extraction, and production of crude oil and natural gas from land-based or off-shore wells.
“Oil price is also rising amid the backdrop of tightening supply, lower crude stockpiles and expectations of an increase in demand as vaccination roll-outs widen,” a Zacks article published in Yahoo Finance noted. “This product follows the Dynamic Energy Exploration & Production Intellidex Index, which thoroughly evaluates companies involved in the exploration and production of natural resources used to produce energy based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value.”
“Holding 32 stocks in its basket, the fund has amassed $75 million in its asset base while trading in an average daily volume of 45,000 shares,” the article added.
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