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Time for Oil & Gas ETFs for 2023?

·3 min read

Oil prices jumped recently after Saudi indicated that OPEC could slash output. The Organization of the Petroleum Exporting Countries plans to lower production to correct the recent oil price decline driven by poor futures market liquidity and recessionary fears. The decision has been taken despite the fact that the oil market is extremely tight. This could boost oil prices again by the beginning of 2023, says one analyst, as quoted on Yahoo Finance.

"Domestically, whether it's oil or it's gas, these companies have very limited incremental capacity at this time," Truist Securities Managing Director of Energy Research Neal Dingmann told Yahoo Finance Live.Saudi state news agency SPA cited Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman as telling Bloomberg that OPEC has the means and flexibility to deal with challenges.

Plus, Europe has been grappling with energy shortages due to damage to a pipeline system bringing oil from Kazakhstan through Russia. U.S natural gas prices rallied this week to new 14-year highs over reserve concerns and the energy crisis in Europe. Heat waves in Europe also boosted the cooling demand.

Oil prices recently remained subdued amid worries of a global recessionary fears and the prospects of a nuclear deal with Iran. Truist Securities Managing Director of Energy Research Neal Dingmann believes oil could fall to about $80 per barrel this year, before jumping to $110 in early next year, as quoted on Yahoo Finance.

Against this backdrop, investors must be interested in keeping track of oil and energy ETFs. We highlight some ETFs for them below.

ETFs in Focus

United States Oil Fund LP USO

The underlying West Texas Intermediate Light Sweet Crude Oil Index looks to reflect the daily changes of the spot price of light, sweet crude oil delivered to Cushing, OK. The fund charges 81 bps in fees.

Invesco DB Oil Fund DBO

The underlying DBIQ Optimum Yield Crude Oil Index Excess Return Index is a rules-based index composed of futures contracts on Light Sweet Crude Oil (WTI) and is intended to reflect the performance of crude oil. The fund charges 77 bps in fees.

United States Natural Gas Fund LP UNG

The Natural Gas Price Index is the futures contract on natural gas as traded on the NYMEX. The expense ratio of UNG is 1.11% annually.

Invesco DB Energy Fund DBE

The DBIQ Optimum Yield Energy Index Excess Return Index is a rules-based index composed of futures contracts on some of the most heavily traded energy commodities in the world: Light Sweet Crude Oil (WTI); Heating Oil; Brent Crude Oil; RBOB Gasoline; & Natural Gas. It is intended to reflect the performance of the energy sector. The fund charges 77 bps in fees.

United States Brent Oil Fund LP BNO

The Brent crude oil looks to track the daily changes in percentage terms of the spot price of Brent crude oil. The fund’s expense ratio is 1.02% annually.

United States Gasoline Fund LP UGA

The underlying Gasoline Price Index looks to reflect the changes in the price of gasoline, as measured by the price of the contract on unleaded gasoline for delivery to the New York harbor, traded on the NYMEX that is the near month to expire, except when the near contract is within two weeks of expiration, in which case it will be measured by the contract that is the next month contract to expire. The expense ratio is 0.90% annually.


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United States Oil ETF (USO): ETF Research Reports
 
Invesco DB Oil ETF (DBO): ETF Research Reports
 
United States Brent Oil ETF (BNO): ETF Research Reports
 
United States Gasoline ETF (UGA): ETF Research Reports
 
Invesco DB Energy ETF (DBE): ETF Research Reports
 
United States Natural Gas ETF (UNG): ETF Research Reports
 
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