Oil prices keep climbing higher with West Texas Intermediate futures topping $50 per barrel on Tuesday for the first time in 10 months. That could be enough to entice some investors revisit some volatile equity-based energy ETFs.
Still, making the sector’s rebound this year all the more impressive is that it comes against the backdrop of still low oil prices, little help in the way of significant production cuts and massive spending reductions by global oil majors.
P lenty of skeptics remain regarding oil’s fundamental outlook. There might be something to that skepticism as many of the world’s major ex-U.S. producers of oil have not displayed a willingness to pare production. Even the output reductions in the U.S. have been modest. The good news is U.S. shale output is slightly declining, but challenges remain on the output front from OPEC producers.
Todd Gordon of TradingAnalysis.com told CNBC he sees XOP “breaking through to new highs. More specifically, Gordon believes that the XOP is actually set to break above the $37 mark and has set $36.50 as the key level to watch for in the next coming days,” according to the network.
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Making the sector’s rebound this year all the more impressive is that it comes against the backdrop of still low oil prices, little help in the way of significant production cuts and massive spending reductions by global oil majors.
There are plenty of factors to consider before coming to the conclusion that oil and the related exchange traded products are completely out of the woods. Earlier this month, Saudi Arabia and Iran failed to find common ground during the oil freeze talks in Doha, Qatar.
“If the XOP does move to $36.50, Gordon predicts that oil will keep moving up,” according to CNBC.
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SPDR S&P Oil & Gas Exploration & Production ETF