For Immediate Release
Chicago, IL –February 5, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: SPDR S&P Oil & Gas Equipment & Services ETF XES, Invesco Dynamic Oil & Gas Services ETF PXJ, VanEck Vectors Oil Services ETF OIH, iShares US Oil Equipment & Services ETF IEZ and United States Oil USO.
Here are highlights from Monday’s Analyst Blog:
5 Reasons Why Oil Saw the Best January: 5 ETF Winners
Crude oil prices have been on the rise since the start of 2019, buoyed by a fresh output cut decision by OPEC and Russia for the first six months of the year, U.S. sanctions against Venezuela on political grounds and hopes of a U.S.-Sino trade truce. All these led oil to about 18% higher in January and helped the liquid commodity see its best January on record (read: Top ETF Stories of January).
Inside the Drivers
Fresh Output Cut by OPEC+
Early last December, OPEC and Russia reached an agreement to cut output by 1.2 million barrels a day to take care of the supply glut and boost prices. Under the deal, OPEC and Russia will cut 800,000 bpd and other top non-OPEC oil producers will be responsible for the rest.
The fresh output cut deal is applicable for the first six months of 2019, with a review scheduled for April. The group has used October output levels as a reference point for cuts. Iran got an exemption from the cuts as it is already facing U.S. sanctions (read: Is Fresh OPEC+ Output Cut Enough to Boost Oil & Energy ETFs?).
On Jan 28, the Trump administration imposed sweeping sanctions against Venezuelan state-owned oil firm Petróleos de Venezuela, S.A. Oil cargoes from Venezuela are now up in the air as U.S. blocks payments. PDVSA makes up nearly all of Venezuela’s exports. And U.S. sanctions came in response to the reelection of socialist President Nicolas Maduro, a vote broadly viewed as a sham (read: US Sanctions Against Venezuela? ETFs to Top & Flop).
Dovish Fed Comments
Investors should note that the Fed has given signs of adopting a dovish stance on rate hikes this year. Global growth worries and subdued inflation mainly led the Fed to take up a dovish tone. This in turn weighed on the greenback and boosted broad-based commodity ETFs as these are mostly priced-in the U.S. dollar. Moreover, an easy money policy would boost consumer spending and demand for more oil.
Global Output on Decline?
OPEC’s output fell by 890,000 bpd in January, according to a Reuters survey, the largest monthly drop since early 2017. Apart from Iraq, the cartel is appeared to be diligently following the production curb agenda. U.S. shale production is also on the decline. Though output growth is still expected to be positive this year, the increase could be the minimum in years.
Plus, Iran sanctions waivers are set to end in May, and the United States looks to further reduce Iranian oil exports. Libya has seen output loss in December, per oilprice.com.
U.S.-Sino Trade Optimism
The month of January was all about U.S.-China trade optimism. Both parties met on Jan 30 for trade negotiations. China's trade delegation claimed to have "important progress" in the latest round of talks with the Unite States, per China's state media reports, quoted on bbc.com.
Also, there are news that the two sides are considering a meeting in Vietnam on Feb 27 and 28 and are striving to reach a resolution on the trade front. If a trade deal is reached, global growth worries will backtrack to a large extent and demand for oil will rise (read: U.S.-China Trade Talks Begin: 5 Safe ETFs to Follow).
Top-Performing Energy ETFs & Stocks
Against this backdrop, we highlight five top-performing oil/energy ETFs and stocks year to date (as of Feb 1, 2019).
SPDR S&P Oil & Gas Equipment & Services ETF– Up 25.1%
Invesco Dynamic Oil & Gas Services ETF – Up 22.8%
VanEck Vectors Oil Services ETF – Up 22.7%
iShares US Oil Equipment & Services ETF – Up 22.3%
United States Oil – Up 20.4%
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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SPDR S&P Oil & Gas Equipment & Services ETF (XES): ETF Research Reports
US Commodity Funds United States Oil Fund (USO): ETF Research Reports
iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports
VanEck Vectors Oil Services ETF (OIH): ETF Research Reports
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