The energy sector has been one of the few bright spots in 2022, thanks to rising oil prices amid inflation. As such, it’s translating into big profits for oil companies, which should in turn boost oil-focused exchange traded funds (ETFs).
Ideal options for ETF investors wanting to play continued upside in oil are funds such as the United States Oil Fund (USO ) and the United States Brent Oil Fund (BNO ). They provide alternate exposure to oil prices aside from investing in spot oil or oil price futures.
Another option to consider is oil services.
“Big oil services companies started releasing their quarterly numbers from this week,” a Zacks article said. “The outlook is bullish this time thanks to the upbeat oil market. OPEC+ producers agreed on deep output cuts, seeking to spur a recovery in crude prices despite repeated calls from U.S. President Joe Biden’s administration for the group to pump more to lower fuel prices and contain global inflation.”
“Against this backdrop, a close monitoring of the energy space, which deals with oil field services, is warranted,” the article added.
Also Check Out Oil Services
Companies that produce the majority of their profits from selling oil can’t have all the fun. Ancillary services that support these companies provide a backdoor play on rising oil prices.
As such, investors may also want to check out the VanEck Vectors Oil Services ETF (OIH ). The fund seeks to replicate as closely as possible the price and yield performance of the MVIS® US Listed Oil Services 25 Index (MVOIHTR), which 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.
OIH isn’t the only fund in town that focuses strictly on support services for the oil business. A couple of other funds to consider include the SPDR Oil & Gas Equipment & Services ETF (XES ) and the iShares U.S. Oil Equipment & Services ETF (IEZ ).
The PHLX Oil Service Sector provides a snapshot of how the sub-industry has been doing. Up over 50%, the index shows that the oil services sector has been a beneficiary of the rise in oil prices.
For more news, information, and strategy, visit the Beyond Basic Beta Channel.