The oil leak in the Gulf of Mexico threatens to wreak environmental
havoc, disrupt the local fishing industry and lead to yet more
fallout. While this is a situation that needs to be resolved
quickly, it may present an exchange traded fund (
) opportunity as oil trades ever higher.
Oil-focused ETFs are moving higher today on reports that BP's
latest effort to contain the leak failed. Today,
United States Oil Fund (NYSEArca:
is up about 1.5%;
iShares Dow Jones US Oil & Gas Ex Index
is up nearly 4%. Oil ministers foresee that demand for oil could
push prices up past $85 now that the crisis in Greece is close to a
ETFs to Watch in the Wake of European Deal.
According to Kevin Grewal of Minyanville
, two industries are cashing in on what could potentially be the
worst environmental disaster in recent memory. Those two industries
are the water-treatment and environmental-services industries,
which provide detergents, emulsifiers and products that can
dissipate oil and help contain its negative effects.
Three leaders in the effort to cleanup BP's mess are Nalco
Holding Co, Baker Hughes and Clean Harbor Inc. If you want to gain
diversified exposure to companies like these, you can invest in the
Market Vectors Environmental Services ETF (NYSEArca:
, which tracks 21 such companies.
Focusing directly on the oil services sector, there is mounting
fear that the policy fallout will be detrimental to exploration and
drilling. Fred Dickson of D.A. Davidson & Co. says he is
concerned that Congress will overreact and implement ill-considered
reports Josh Lipton of Minyanville
Such legislation would include bans on offshore deep water
drilling in previously approved regions, limiting current offshore
drilling and increasing the costs of production. [
Commodity ETFs for the Jim Rogers Bull.
More ominously for BP, Sen. Robert Mendez of New Jersey is
trying to pass legislation that would increase BP's liability from
$75 million - the legal cap - to $10 billion. As such, Moody's
downgraded its outlook for Aa1 senior unsecured ratings from stable
to negative. [
ETFs to Hedge 3 Inflationary Risks.
But amidst the negative press, a Bank of America Merrill Lynch
team of analysts, led by Doug Leggate, is optimistic that any added
costs to exploration and drilling would not be a significant
deterrent to oil companies.
For more stories on oil sector, visit our
iShares Dow Jones U.S. Oil & Gas Exploration Index
iShares Dow Jones U.S. Oil Equipment Index (
PowerShares Dynamic Energy Exploration & Production
SPDR S&P Oil & Gas Exploration & Production
Sumin Kim contributed to this article.