Oil Refiners ETF Pumping Strong This Year
This article was originally published on ETFTrends.com.
The oil markets are improving and the energy sector has strengthened on the stabilized prices, with oil refiners and sector-related ETF leading the charge this year.
The VanEck Vectors Oil Refiners ETF (CRAK) , the only exchange traded fund dedicated to oil refiners, increased 5.2% year-to-date, compared to the 2.7% gain in the widely observed Energy Select Sector SPDR (XLE) .
"I do think it is certainly worth pointing out the strong performance of the industry as a whole," Brandon Rakszawski, Product Manager for VanEck, told ETF Trends. "Looking at the U.S. GICS Energy sub-industries, oil refining & marketing companies have led the group in performance in five of the last eight calendar years, including strong outperformance in 2017. YTD 2018 performance is equally as impressive. On a trailing basis, the oil refining and marketing sub-industry is the leading energy sub-industry based on total return for all of the YTD, 1, 3, 5, and 10-year periods through April."
The U.S. refining sub-sector has been one of the most profitable sectors in the U.S. economy over the past five years.
Refiners Space Supported by M&A Activitiy
The strength reflected by the refiners space has also been supported by greater merger and acquisition activity as companies find themselves with more cash as oil prices rebound. For example, Marathon Petroleum Corp (MPC) has agreed to buy rival Andeavor (ANDV) for $23 billion, creating the largest American oil refiner just as oil prices are rising amidst growing global demand for fuels and an extended industry rally, the Wall Street Journal reports.
“The time is right now because for this industry, the wind is behind our backs,” Andeavor Chief Executive Greg Goff said.
The Marathon Petroleum and Andeavor deal comes off the heels of a $9.5 billion agreement between producers Conco Resources (CXO) and RSP Permian (RSPP) in West Texas' Permain basin, an area that is expected to produce as much as Iran or Iraq within a few years.
The deal making reflects growing confidence in rising oil prices. U.S. crude oil prices are up about 50% in the past year, with West Texas Crude oil futures now trading around $68.5 per barrel.
For more information on the energy market, visit our energy category.
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